Stocks Hit as Deutsche Bank Fine Triggers Bank Rout


U.S. stocks fell on Friday as the possibility of a $14 billion fine against Deutsche Bank weighed on big banks and investors wrestled with lingering uncertainty about when the U.S. Federal Reserve will hike interest rates.

The Dow Jones industrial average fell 89.3 points, or 0.49 percent, to 18,123.18, the S&P 500 lost 8.17 points, or 0.38 percent, to 2,139.09 and the Nasdaq Composite dropped 5.12 points, or 0.1 percent, to 5,244.57.

Continue Reading Below

The far bigger-than-expected penalty was levied by the U.S. Department of Justice to settle claims that the German bank missold mortgage-backed securities.

Deutsche Bank's U.S.-listed shares were down 9.4 percent. Dow components Goldman Sachs and JPMorgan fell 0.9 percent each.

The S&P 500 financial index dropped 0.74 percent, dragging down the benchmark index the most. The KBW Bank index fell 0.90 percent, putting it on track for its second straight week of decline.

"The size of the Deutsche fine is putting pressure on the financials and is combined with the likelihood of the Fed putting off raising rates next week," said Thomas Wilson, senior investment manager at Brinker Capital in Pennsylvania.

Traders have all but ruled out the possibility of the Federal Reserve raising interest rates at its meeting that starts next Tuesday. Investors will instead look for clues on when the central bank will eventually pull the trigger.

At 12:25 a.m. ET (1625 GMT), the Dow Jones Industrial Average was down 63.62 points, or 0.35 percent, at 18,148.86.

The S&P 500 was down 8.16 points, or 0.38 percent, at 2,139.1.

The Nasdaq Composite was down 6.49 points, or 0.12 percent, at 5,243.20.

The technology index dropped 0.52 percent, pulled down by Apple's a 0.8 percent decline and Oracle's 4.1 percent drop following a weak quarterly profit.

Helping limit losses was Intel's 2.5 percent gain after the chipmaker raised its third-quarter revenue forecast.

The CBOE Market Volatility index, Wall Street's "fear gauge", reversed course and was down 0.43 percent despite the expiry of futures and options on stocks and indexes, or quadruple witching.

Declining issues outnumbered advancing ones on the NYSE by 1,989 to 911. On the Nasdaq, 1,492 issues fell and 1,245 advanced.

The S&P 500 index showed five new 52-week highs and no new lows, while the Nasdaq recorded 55 new highs and 35 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)

What do you think?

Click the button below to comment on this article.