"When investors are optimistic to the extreme, it means that most of their money is already in the market and there's no more money coming in", Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.
On Thursday, the three major USA indexes logged their worst performances since mid-May (http://www.marketwatch.com/story/us-stocks-set-up-for-another-day-of-losses-as-north-korean-tensions-simmer-2017-08-10) in a session dogged by geopolitical concerns. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman and the Dow Jones U.S. defense index was up 1.48 percent after hitting a record high. Macy's sank 10.3 percent and Kohl's lost 5.8 percent.
The S&P 500 closed 0.24 percent lower at 2,474.92, with materials leading decliners.
The issues between North Korea and the United States have soared to an unprecedented level after President Donald Trump issued a new round of comments against North Korea, while warning it not to strike Guam or any U.S. ally.
The Dow Jones industrial average fell 85 points, or 0. percent, to 21,962.
After a dip of as much as 0.52 percent earlier in the day, investors appeared to take some comfort in Tillerson's comments, said Richard Steinberg, managing director at HighTower Advisors in NY.
The S&P 500 has hadn't a single day move of more than 0.5 percent since mid-July and has fallen more than 1 percent only twice this year.
Among company results, Prudential easily beat analysts' profit forecasts at the half-year stage thanks to strong trading in Asia and said it had met its target for surplus cash generation ahead of schedule.
So far the measured decline in global stocks suggests investors buy that scenario. Its shares slid $9.77, or 5.3 percent, to $174.02.
OIL: Benchmark U.S. crude lost 12 cents to $48.47 per barrel on the on the New York Mercantile Exchange. Brent crude slid 80 cents U.S., or 1.5%, to US$51.90.
It was a down day for Asian stocks, as traders shied away from riskier assets amid the ongoing war of words between North Korea and the U.S. The biggest loser in the region was Hong Kong's Hang Seng, which dropped 1.1%.
The pound was down 0.09% against the euro at 1.1049 and down nearly 0.2% on the dollar at 1.2978.
The ten-year yield added to the 4.2 basis point loss posted on Wednesday, falling to its lowest closing level in well over a month. Wall Street was poised for a soft opening with S&P futures and Dow futures both down 0.2 percent.
Manufacturing production in June was flat, as predicted, after falling 0.1% in May, while United Kingdom construction output badly missed forecasts fell 0.1% month on month and rose 0.9% year-on-year. Early Friday, the ICE Dollar Index was up just 0.04% to 93.437.