Updated from 9:50 a.m. ET, Thursday, July 6. 

Stocks were lower on Thursday, July 6, as the U.S. debated the severity of action against North Korea.

The S&P 500 fell 0.7%, the Dow Jones Industrial Average declined 0.5%, and the Nasdaq slid 1%.

The chances for diplomacy to deal with North Korea's recent actions are "quickly closing," U.S. ambassador Nikki Haley told the U.N. Security Council on Wednesday, July 5.

"One of our capabilities lies with our considerable military forces," she continued. "We will use them if we must, but we prefer not to have to go in that direction."

President Donald Trump vowed to address the "very, very bad" behavior of North Korea during a press conference in Poland on Thursday but stopped short of promising military action following the rogue nation's firing of an intercontinental ballistic missile earlier this week.

Speaking during a joint media event in Warsaw alongside Poland's President Andrzej Duda, Trump said that he wouldn't draw "red lines" with respect to North Korea, but nonetheless said the country's behavior had been "a shame" and that there would be "public consequences."

"We'll just have to wait and see over the coming weeks and months," he said. "It's a shame, the way they're behaving, and something will need to be done about it."

North Korea said Wednesday that its intercontinental missile, fired into Japan's Exclusive Economic Zone early Tuesday, July 4, is able to carry a large nuclear warhead. The U.S. Defense Department believes the missile could reach as far as Alaska and possibly other parts of the North American mainland.

The missile firing comes days before of a meeting of G20 leaders where a discussion of the proliferation of weapons in Pyongyang will be on the agenda. World leaders will attend the G20 summit in Hamburg, Germany on Friday, July 7.

Trump and Russian President Vladimir Putin will meet on the sidelines of the summit to discuss, among other things, sanctions against Russia and the country's involvement in the fight against ISIS. Meeting outcomes will be closely dissected as the Trump White House continues to battle allegations of collusion with the foreign government during the 2016 election.

Trump will also have to justify his June decision to back out of the Paris Agreement, a worldwide voluntary commitment to fighting climate change.

Tech stocks were a major drag on markets Thursday, extending declines in recent weeks that have swept industry leaders from records. The FAANG stocks -- Facebook Inc. (FB) - Get Facebook, Inc. Class A Report , Amazon.com Inc. (AMZN) - Get Amazon.com, Inc. Report , Apple Inc. (AAPL) - Get Apple Inc. (AAPL) Report , Netflix Inc. (NFLX) - Get Netflix, Inc. (NFLX) Report , and Alphabet Inc. (GOOGL) - Get Alphabet Inc. Class A Report -- were lower, while the Technology Select Sector SPDR ETF (XLK) - Get Technology Select Sector SPDR Fund Report declined 1.1%. The FAANG stocks had made a substantial contribution to the S&P 500's year-to-date gains before an initial selloff on June 9. 

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Nerves also rose ahead of the U.S. jobs report due Friday, July 7, the most closely watched data point of any month. The U.S. economy is forecast to have added 176,500 jobs in June, according to economists surveyed by FactSet, up from about 138,000 jobs added in May.

Around 158,000 jobs were added in U.S. nonfarm private sector employment in June, according to a report from payroll processor ADP on Thursday. That trailed an expected increase of 185,000.

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Weekly jobless claims rose over the past week, though held near multi-year lows. The number of new claims for unemployment benefits increased by 4,000 to 248,000 in the past week, worse than the 243,000 analysts expected. The less volatile four-week average increased by 750 to 243,000. 

U.S. imports fell, while exports increased in May, paring the overall trade deficit by 2.3% to $46.5 billion. Exports increased by 0.4%, and imports dipped by 0.1%.  

Crude oil prices rallied above $45 a barrel on Thursday after a larger-than-expected drawdown in domestic supplies. U.S. oil stockpiles fell by 5.8 million barrels in the week ended June 30, the American Petroleum Institute reported late Wednesday. The drop was far larger than an anticipated decline of 1.6 million barrels. Gasoline stockpiles fell, while distillates increased.

West Texas Intermediate crude gained 1.6% to $45.85 a barrel on Thursday morning.

European markets declined after the European Central Bank signalled a hawkish turn, even considering removing a longstanding commitment to accelerate quantitative easing if needed. In minutes from a June meeting, one ECB member said a pledge to accelerate bond buying "could be reviewed" given recent improvements in eurozone growth and outlook. The ECB decided against removing the language. 

Germany's DAX fell 0.8%, the CAC 40 in France slid 0.9%, and the FTSE 100 in London dropped 0.5% on Thursday. 

Non-manufacturing activity in the U.S. rose at a faster-than-expected pace in June, according to the ISM Non-Manufacturing Index. The index increased to 57.4 in June from 56.9 in May, surprising analysts expecting a dip to 56.5. Any reading above 50 is indicative of expansion in services activity. 

Yum! China Holdings (YUMC) - Get Yum China Holdings, Inc. Report pulled back 12% after a so-so second quarter. The parent of KFC and Pizza Hut in the China region earned an in-line 27 cents a share, while revenue of $1.59 billion came in flat from a year earlier. Same-store sales increased 3%, higher than an expected 2.4%.

PriceSmart (PSMT) - Get PriceSmart, Inc. Report tumbled 9% after falling short of profit and sales estimates over its fiscal third quarter. Earnings of 62 cents a share missed by 5 cents. Revenue increased 3.7% to $730.3 million, but missed estimates by $4.2 million.

Herman Miller (MLHR) - Get Herman Miller, Inc. Report increased 7% on a mixed fourth quarter. Earnings of 64 cents a share beat consensus by 9 cents. Revenue slipped 0.9% to $577.2 million and missed estimates by $6.3 million.

Costco Wholesale Corp. (COST) - Get Costco Wholesale Corporation Report enjoyed healthy growth over June, particularly after stripping out the effects of gas prices and currency exchange.

The bulk retailer reported net sales of $12.17 billion in June, up 7% from a year earlier. Comparable sales rose 6%, driven by a 6.5% increase in the U.S., 3.2% gain in Canada, and 6.2% rise internationally.

Excluding gas and foreign exchange swings, overall comparable sales rose 6.5% and international markets saw a 7.1% boost.

Costco shares edged higher. But as TheStreet's Brian Sozzi points out, Amazon's (AMZN) - Get Amazon.com, Inc. Report purchase of Whole Foods (WFM) has caused Costco's shares to crash inside a month.

LB Brands Inc. (LB) - Get L Brands, Inc. (LB) Report was 10% lower after reporting a sharp decline in sales in June. The parent of Victoria's Secret and Bath & Body Works posted a 6% drop in sales to $1.21 billion in June. Same-store sales fell 9%. In the 22 weeks to July 1, sales dropped 9%. 

HSN Inc. (HSNI) surged nearly 30% after Liberty Interactive Corp. (QVCA) agreed to acquire the portions of the business it doesn't already own. Liberty will purchase the remaining 61.8% stake in an all-stock deal with a value of roughly $2.6 billion and equity value of $2.1 billion. 

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