Closely followed trader Art Cashin said Friday it appears Wall Street has decided North Korea tensions will not result in a "nuclear event."
Stocks opened higher Friday after a Labor Department report showed a lower-than-expected rise in consumer prices. The market's gains were muted as tensions between the U.S. and North Korea escalated.
"There were divergences and other signs before that the market wanted to take a break. ... Right now they decided it's probably not going to be a nuclear event. And that's why we didn't get hit much worse," UBS' director of floor operations at the New York Stock Exchange said on CNBC's "Squawk on the Street."
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, soared this week amid the heightened tensions over North Korea. The VIX was more than 5 percent lower Friday, but was up about 50 percent week to date.
"(The markets are) going to try and drag their feet assuming the next move is up to North Korea and nothing happens nearly to the end of next week," Cashin said.
In a tweet Friday, Trump said the U.S. military is "locked and loaded" to respond to a Pyongyang provocation. A day before, the president said that his warning of bringing "fire and fury" to North Korea if it continues its threats may not have been "tough enough."
Regarding Trump, Cashin said there is some concern that the president could be "boxing himself in" rhetorically and "that he's kind of got into the line in the sand routine."
"Then if something comes up and there aren't any military options, his credibility is a little bit stretched," Cashin said.
The Wall Street veteran also reiterated his concerns that the market could top out this month and then sell off in a few months. He also said to watch safe havens. On Wednesday, Cashin said that if the situation between the U.S. and North Korea escalates, a flood into safe havens will be the first warning sign.