Bank stocks slide on Deutsche Bank woes
NEW YORK - U.S. stocks are skidding Thursday and giving up some of their gains from the last two days, with banks in particular take large losses as investors worry about the stability of Deutsche Bank and other financial institutions.
The Dow Jones industrial average lost 162 points, or 0.9 percent, to 18,178 as of 3:08 p.m. Eastern time. It was down 247 points earlier. The Standard & Poor’s 500 sank 16 points, or 0.7 percent, to 2,155. The Nasdaq composite dropped 40 points, or 0.7 percent, to 5,279.
Financial stocks slumped as more worries emerged about Germany’s Deutsche Bank. They are concerned about the bank’s health as U.S. regulators seek $14 billion to settle legal claims over its sales of mortgage securities. It’s also unclear if the German government would support the bank if it’s low on capital.
Deutsche Bank has said it isn’t seeking government aid. Its U.S. shares have lost more than half their value this yea. On Thursday they tumbled 85 cents, or 6.9 percent, to $11.45 in heavy trading. Germany’s DAX lost 0.3 percent Thursday while other European stock indexes traded higher.
JPMorgan Chase slid 88 cents, or 1.3 percent, to $65.83 and Goldman Sachs shed $4.14, or 2.5 percent, to $159.31.
Quincy Krosby, market strategist for Prudential Financial, said investors don’t trust Deutsche Bank’s statements about its financial health and they are worried what will happen if the bank runs low on capital.
“The market begins to worry about Deutsche Bank and then the relationships Deutsche Bank has with other banks here in the United States,” she said.
Mylan slumped after a group of senators asked the Department of Justice to investigate whether the drugmaker broke the law when it classified its emergency allergy shot EpiPen as a generic drug, which allowed Mylan to make lower rebate payments to states. Mylan gave up $2.09, or 5.2 percent, to $38.13. The stock is down 22 percent as the company has come under criticism for repeatedly raising EpiPen’s price.
Other drug companies traded lower as investors worry that the government will take action to rein in drug price increases. Merck fell $1.31, or 2.1 percent, to $61.99. Amgen fell $3.72, or 2.2 percent, to $165.99.
Those concerns also pushed investors to buy government bonds, which sent prices higher. The yield on the 10-year Treasury note fell to 1.56 percent from 1.57 percent.
Oil prices continued to rise Thursday after a 5 percent surge the day before. Energy prices had jumped after the nations of OPEC, which collectively produce more than third of the world’s oil, agreed to a small cut in production. The decision was a surprise, but something investors had long hoped for. The deal won’t be finalized until November.
U.S. crude picked up 78 cents, or 1.7 percent, to $47.83 a barrel in New York. Brent crude, the international benchmark, added 55 cents, or 1 percent, to $49.24 a barrel in London.
Companies that drill for oil rose sharply as investors expected them to benefit from higher prices for crude. Devon Energy added $1.76, or 4.2 percent, to $43.34. Companies that provide rigs and other equipment to drillers also rose as investors expected that higher prices will encourage more drilling.
Gold rose $2.30 to $1,326 an ounce. Silver gained 7 cents to $19.19 an ounce. Copper was flat at $2.19 a pound.
The dollar jumped to 101.10 yen from 100.75 yen. The euro fell to $1.1208 from $1.1214.
Wholesale gasoline fell 1 cent to $1.47 a gallon. Heating oil rose 2 cents to $1.51 a gallon. Natural gas shed 4 cents to $2.96 per 1,000 cubic feet.