The hope that the Fed will have to slow its rate-hike path appeared to stop, at least for now, the near $1-trillion loss in world stocks valuations this week triggered by the war of words between Pyongyang and Washington.
A weaker opening on Wall Street further added to the downward pressure in Europe.
Analysts said media and entertainment stocks also seemed to get caught up in the broader market drop, but emphasized it was often hard to isolate reasons behind specific stocks' movements.
Keeping up his tough talk, U.S. President Donald Trump told reporters that North Korean leader Kim Jong Un's government should "get their act together" or face the consequences, and suggested that his earlier threat to unleash "fire and fury" on North Korea was too mild. Pacific territory of Guam.
The technology sector was the S&P's biggest drag with a 2.2 percent drop.
The Dow Jones industrial average lost 71 points, or 0.3 percent, to 22,013.
The Labor Department said its Consumer Price Index edged up 0.1 percent last month, which was below the 0.2 percent rise expected by economists polled by Reuters. It's also called the "fear index".More news: Buccaneers cut Roberto Aguayo one year after trading up to draft kicker
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Biotech companies Celgene and Amgen lost 3.8 percent and 2.6 percent, respectively. Japan was closed on a public holiday. Hong Kong and Taiwan benchmarks also slid on elevated volumes, as North Korea has exploded onto traders' screens in a hitherto subdued and quiet August trading week. Over the next three months, the average gain has been good but not great - +1.15%.
On the currency markets, the pound fell 0.17% against the dollar to $1.2981 and fell 0.1% against the euro to 1.1051 euros.
Trump's comments sparked a late afternoon selling on Tuesday, with the Dow ending a nine-day streak of closing records.
Technology and consumer-focused companies helped lift US stocks higher Tuesday, steering the market indexes further into record territory. Yields on bonds move inversely to their price.
According to data from Bloomberg, the price of gold rose as much as 1.59% to £1,276, while the price of silver spiked 2.61% to $16.84 as some investors looked to safe-haven assets following the growing row.
The data comes amid tepid inflation that has remained below the Federal Reserve's 2 percent target, despite low unemployment.