"We heartily celebrate the successful test launch of the Hwasong-15 which showed Chosun (North Korea)'s power and greatness to the whole world", read one banner held up by the crowd, referring to the missile.
National Security Adviser H.R. McMastersaid Saturday that the chances of war between North Korea and the United States are "increasing every day".
His comments came three days after North Korea carried out its first ballistic missile test in two months, in defiance of United Nations resolutions.
North Korean leader Kim Jong Un.
With every missile launch or nuclear test, Kim has improved his country's capabilities, McMaster said. It has been set up under the South Korean army's Special Warfare Command.
Trump has said he spoke with Chinese President Xi Jinping about Pyongyang's "provocative actions", and he vowed that additional major sanctions will be imposed on North Korea.
These aircraft will stay in South Korea for the week.
It flew 600 miles (950 km) before splashing down in waters near Japan and is potentially capable of striking targets as far as 8,100 (13,000 km), which would put Washington within reach.
But it is the stealth fighters that experts say pose the biggest threat to Pyongyang.
"North Korea is continuing to pursue its ICBM in a methodical and pragmatic manner, making progress in incremental steps", said Joseph Bermudez from 38 North, a Washington-based North Korea monitoring project.
North Korea reacted angrily on Sunday to the air manoeuvres, accusing the USA and South Korea of a "grave military provocation" that will "push the already acute situation on the Korean Peninsula to the brink of nuclear war".
The isolationist state recently tested a new intercontinental ballistic missile that, it claimed, could reach anywhere on the U.S. mainland.
A U.S. official said Saturday technical analysis of that missile's flight is ongoing but the "the North Koreans had problems with re-entry".
The Hwasong-15 is believed to have reached the highest altitude ever recorded by a North Korean missile.
A parliamentary committee on defense on Saturday approved a resolution to condemn North Korea's latest long-range missile test and its violation of an armistice agreement that ended the 1950-53 Korean War.
A solid-fuel system for an ICBM would be a significant development and could allow the North Koreans to transport and launch a missile more quickly, compared to a liquid-fuel system that requires lengthy preparation.