Analysts said yields, which move inversely to prices, could fall further if the geopolitical tensions continue to rise - even if central bankers in the U.S. continue to talk of raising interest rates or scaling back stimulus programmes. The S&P fell as much as 0.52 percent at its session low.
The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the USA presidential election on Thursday, but was down 1.22 points at 14.82 points on Friday.
All 11 major S&P sectors were lower and the consumer discretionary index .splrcd was the biggest loser with a 1 percent drop. Platinum also moved up 0.8% to $979.85, while palladium moved up a percentage point to $900.30. Investors "have lost the taste for risk when North Korea has threatened to launch four medium range missiles over Japan and crashed near the american island of Guam, in the Pacific, wielding a threat extremely seriously", summarised analysts at National Bank Financial.
US crude oil crude futures edged up 5 cents to $48.64 per barrel.
Stock markets around the world continued their downward slide after US President Donald Trump made another verbal attack on North Korea.
U.S. dairy group Dean Foods dropped nearly 21 percent as its quarterly earnings fell, and the stock received a downgrade from JPMorgan.
North Korean tensions put Americans on tiny Guam in crosshairs
Resident Isaac Camacho, 19, says he feels Guam's relationship with the USA mainland is "a little misunderstood on their part". About 40 percent of Guam's residents are Chamorros , the name for the native people.
At the close trading in NY, the Dow Jones Industrial Average was down 204.69 points, or 0.9%, to 21,844.01, its biggest one-day fall since May 17.
"If the market truly believed the North Korea reaction was imminent, I think it would be down a lot more than it is", said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
"European indices are following their Asian counterparts lower once more today, as the risk aversion seen over the past two days continues apace", said IG market analyst Joshua Mahony in a note.
Japanese markets were closed for a holiday but the yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.
South Korean stocks ended slightly lower Thursday as foreign investors offloaded local stocks on profit-taking amid escalating tensions over North Korea's provocations.
It was 0.2 percent lower at 1.1310 francs, compared with highs of 1.1537 francs hit a week ago. It was trading at 109.16 yen, after retreating 0.8 percent on Thursday. Copper lost 0.39 percent to $6,455.00 a tonne.