US stocks tumble on worries about Deutsche Bank

Wall Street dropped on Thursday, weighed down by Apple as well as selling in Wells Fargo, Citigroup and other major banks as investors worried about the health of Deutsche Bank.
The Deutsche Bank logo is displayed on the floor of the New York Stock Exchange in New York, US, on Sept 26, 2016.
The Deutsche Bank logo is displayed on the floor of the New York Stock Exchange in New York, US, on Sept 26, 2016. PHOTO: BLOOMBERG

NEW YORK (AFP) - Wall Street stocks tumbled on Thursday (Sept 29) on renewed worries about banks following a report on withdrawals from Deutsche Bank and a bruising Capitol Hill hearing with the head of Wells Fargo.

The Dow Jones Industrial Average dropped 1.1 per cent to 18,143.45.

The broad-based S&P 500 fell 0.9 per cent to 2,151.13, while the tech-rich Nasdaq Composite Index shed 0.9 per cent to 5,269.15.

US shares of Deutsche Bank sank 6.7 per cent following a report that about 10 hedge funds withdrew some funds from the German bank due to worries that mounting legal bills may force the lender to raise capital.

Wells Fargo lost 2.1 per cent after chief executive John Stumpf was berated by lawmakers over a bogus accounts scandal, with some demanding he resign.

Other large banks, including Goldman Sachs and JPMorgan Chase, also retreated.

"Memories are very fresh from the financial crisis," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

"The financial system is the lifeblood of any economy and if the financials are weak, that has a negative implication for the lending needed to support a growth of the economy."

Petroleum-linked shares mostly rose after Wednesday's deal between Opec producers to limit output boosted oil prices. ConocoPhillips and Halliburton both climbed more than three percent.

Pharmaceutical shares fell as polls showed momentum for a California referendum to limit drug prices. Amgen lost 2.5 per cent, Bristol-Myers Squibb 2.2 per cent and Pfizer 2.0 per cent.

NXP Semiconductors surged 16.9 per cent following a Wall Street Journal report it was in talks to be acquired by Qualcomm for US$30 billion. Qualcomm rose 6.3 percent.