The escalating threat from North Korea and President Donald Trump's increasingly aggressive response kept global markets in fear this week. Here's what you need to know.

Where Markets Ended

Geopolitical uncertainty reigned for the bulk of the week as President Trump and North Korea traded escalating threats, though no concrete steps were made toward conflict.

For the week, the Dow Jones Industrial Average declined 1.1%, and the S&P 500 fell 1.4%. Those are the indexes' worst weekly losses since the week ended March 24. Markets had sold off then after House leaders pulled their health care bill before a crucial vote. Republicans were later able to push through a bill to the Senate, where it collapsed in late July.

The Nasdaq sank 1.5% this week, its worst loss since June 30. The index has suffered more frequent selloffs over the past two months as the tech sector snapped back from a significant run-up at the start of the year. 

The Dow and S&P 500 clinched record closes on Monday, Aug. 7, marking the 35th all-time high for the Dow this year, a streak not seen since the 38 record closes in 2014. 

A Rising Threat From the East

Global markets have been on edge since Tuesday, Aug. 8, when President Trump warned North Korea of severe retribution should the authoritarian state proceed with any more missile tests or threats.

Trump said that further threats would be met with "fire and fury like the world has never seen." He doubled down on those remarks on Thursday, suggesting that perhaps his earlier rhetoric wasn't harsh enough.

In a Friday morning tweet, Trump wrote: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong-un will find another path!"

Trump's threats have escalated since reports broke at the beginning of the week that North Korea had successfully produced a nuclear warhead that could be fitted inside its missiles. The U.N. Security Council unanimously voted on Saturday, Aug. 5, to impose new sanctions on North Korea after Pyongyang conducted several missile tests.

North Korea has since threatened to launch missiles at the U.S. territory of Guam, and the country previously threatened "all-out war, wiping out all the strongholds of enemies, including the U.S. mainland."

"The "wall of worry" is back under construction following escalating rhetoric between the U.S. and North Korea," Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, told TheStreet. "Increased geopolitical tensions and the increased probability of an unexpected outcome are likely to weigh on equity prices over the coming days and weeks following superb and broad-based year-to-date returns." 

Retailers Take the Stage

Retailers began releasing second-quarter earnings reports in the past week. On Friday, J.C. Penney Co. Inc. (JCP - Get Report)  reported a far worse performance than expected. JCP's net loss of 20 cents a share was 2 cents deeper than a year earlier.

An adjusted loss of 9 cents a share also came in double analysts' consensus. Penney's $2.96 billion of sales did exceed analysts' $2.84 billion estimates, but same-store sales declined by 1.3%. For the full year, J.C. Penney reiterated adjusted earnings guidance of 40 cents to 65 cents a share, wrapping estimates of 49 cents.

Nordstrom Inc. (JWN - Get Report)  exceeded profit and sales forecasts. The department-store chain reported earnings of $110 million, or 65 cents a share, lower than a year earlier when Nordstrom had reported $117 million, or 67 cents.

Analysts had anticipated 64 cents a share in profit. Revenue increased 3.8% to $3.79 billion, beating consensus by $40 million. Same-store sales were a particular bright spot. That measure increased 1.7%, a surprise to analysts looking for a 0.5% drop. Nordstrom also bumped up its full-year earnings to between $2.85 and $3, raising forecasts on the low end by a dime.

Macy's Inc. (M - Get Report)  topped quarterly earnings and sales estimates. Net income rose to 38 cents a share from 3 cents in the year-ago quarter. Adjusted profit of 48 cents a share exceeded estimates by 2 cents.

Revenue of $5.55 billion was slightly higher than expected. Same-store sales for owned locations declined 2.8%, and the retailer anticipates full-year adjusted earnings of $2.90 to $3.15 a share, falling short of a $3.27 consensus.

Kohl's Corp. (KSS - Get Report)  reported a a better-than-expected quarter. Adjusted profit of $1.24 came in higher than estimates of $1.19. Revenue slipped 1% to $4.14 billion, but came in slightly higher than consensus. CEO Kevin Mansell said foot traffic had "accelerated" over the second quarter.

Michael Kors Holdings Ltd. (KORS)  posted a narrower decline in earnings and same-store sales than expected. Profit of 80 cents a share fell by 3 cents from the year-ago quarter, though it was still higher than an estimated 62 cents. Revenue declined 3.6% to $952.4 million, although it topped consensus of $918.7 million. Same-store sales dropped 5.9%, narrower than a projected 9.2% fall.

For the current quarter, Michael Kors anticipates earnings between 80 cents and 84 cents a share on sales of at least $1.035 billion. Analysts predicted earnings of 78 cents a share on revenue of $1.01 billion. The company said same-store sales may drop in the "mid-single digits."

Even More Earnings

Walt Disney Co. (DIS - Get Report) was one of the largest companies to post second-quarter earnings in the past week. The media group reported slower-than-expected revenue growth at its cable division and said it would invest in online streaming streaming services to offset falling ad sales. Earnings of $1.58 a share came in 3 cents above estimates, while revenue dipped 0.3% to $14.24 billion, missing expectations by $180 million.

CEO Bob Iger said Disney is planning to leverage new technologies to sell its television shows, movies and sporting events directly to consumers while maintaining its current relationships with pay-TV operators. Disney also announced plans to pull its catalog from streaming service Netflix Inc. (NFLX - Get Report) as it prepares to launch direct-to-consumer streaming in 2019. 

"It's high time, given the technology available to us, that we connect to them directly," Iger said Tuesday following the release of earnings. "We believe ultimately that our ability to generate revenue and grow profits will be greater than the business models that we currently have."

Snap Inc. (SNAP - Get Report)  posted a deeper-than-anticipated loss and weaker user numbers over its second quarter. The messaging-app company reported a net loss of $443.1 million, far wider than $115.9 million a year earlier. On a per-share basis, a net loss of 16 cents a share came in deeper than consensus by 2 cents. Revenue rocketed 153% higher to $181.7 million, yet still came in short of estimates by $5.13 million.

Average revenue per user more than doubled to $1.05, up from 50 cents a year earlier. That also missed estimates of $1.07.

Snap had 173 million daily users during the quarter, a 4% increase from last year's quarter, while analysts were hoping for 175 million users. User growth slowed quarter-over-quarter, too, as 7.3 million new users were added to the platform compared with 8 million during the first quarter.

Blue Apron Holdings Inc. (APRN - Get Report)  released earnings for the first time since going public on June 29. The meal-kit delivery services reported a loss of 47 cents a share, steeper than consensus of 27 cents. Revenue exceeded estimates, rising 18% to $238.1 million. The number of customers rose by 23% from a year earlier.

More than 90% of S&P 500 companies have reported earnings so far this earnings season. Of those, 73.6% have exceeded profit estimates, above the historical average of 64%, according to Thomson Reuters data. More than 68% have topped revenue estimates, also above the average of 59%.

Soft Inflation Trends Continue

U.S. inflation trends remained soft in July, with consumer and producer prices coming in weaker than expected. The Labor Department reported on Friday, Aug. 11, that consumer prices increased 0.1% in July, half the anticipated increase. Core prices, excluding food and energy also rose 0.1%, though at a slower-than-forecast pace. Consumer prices over the past 12 months have risen 1.7%.

A day earlier, the department said the July Producer Price Index unexpectedly declined. Producer prices fell 0.1%, the largest decline since August 2016 and noticeably short of economists' projections of a 0.1% increase. Core prices, which exclude food and energy, fell 0.1%, the first drop of the year.

Soft inflation could give the Federal Reserve pause in its path to tighter monetary policy.