U.S. stocks closed lower Thursday amid concerns Deutsche Bank's (DB) woes will cast a long shadow on the financial sector. Approximately 10 hedge funds were reducing their exposure in Deutsche Bank, according to a Bloomberg report.
"The European banks took too long to recapitalize coming out of the crisis and you had the Eurozone crisis on top of it," said Troy Gayeski, partner and senior portfolio manager at SkyBridge Capital on Bloomberg. "What you're seeing now is the Eurozone banking issues hangs appall over all of Europe. We don't expect massive systemic risk like you had in 2008. But until the banking system cleans up its really hard to see European assets, particularly equities, getting a bit at all. Europe's been liquidated. Everyone knows what the story is. But why would investors come back until the Deutsche Bank issues are cleared up?"
Deutsche Bank's price of shares sunk 6.67 percent to close at $11.48. Since peaking on July 31, 2015, shares of the Frankfurt-based company have fallen more than 65 percent.
Overall, it was a bearish day on Wall Street after two consecutive days of gains. At one point, the Dow Jones Industrial Average (DJIA) had dropped 248 points but would rally to finish down 195.79 points, or 1.1 percent, to close at 18,143.45. The biggest decliners were Goldman Sachs Group Inc. (GS), which fell 2.75 percent, followed by Merck & Co. (MRK), which dropped 2.20 percent and Nike Inc. (NKE) which dipped 2.05 percent.
Pfizer Inc. (PFE) dropped 1.97 percent as shares of health-care stocks dipped on worries of tighter regulations.
Meanwhile, Apple Inc. (AAPL) fell 1.55 percent after Barclays cut its price target. Apple's shares have dipped 3.45 percent since reaching a high of $116.18 on Sept. 19.