Stocks: Dow dives 196 on Deutsche Bank doubts

Stocks ended sharply lower Thursday after reports surfaced that some hedge funds were cutting their exposure to Germany's Deutsche Bank, a move that raised fears that some clients are leery about doing business with the European banking giant.

The Dow Jones industrial average closed down 196 points, or 1.1%. The Standard & poor's 500 stock index lost 0.9% lower and the Nasdaq composite also sank 0.9%.

The drop comes after a two-day rally fueled by hopes for production cuts in the energy patch and reaction to the first presidential debate.

Shares of Deutsche Bank sank 6.7% after Bloomberg reported that several funds that clear derivatives trades for the bank withdrew excess cash.

Deutsche Bank shares have been under siege ever since the U.S. Justice Department hit the bank with a $14 billion fine for its role in peddling risky residential mortgage-backed securities to investors in the run-up to the 2008 financial crisis.

The swift selloff on Wall Street is a sign of investor nervousness eight years after the bankruptcy of Wall Street titan Lehman Brothers. If the reports of hedge funds moving money out of Deutsche Bank are true, it suggest that investors don’t want to put their own cash at risk  in the event Deutsche Bank’s problems worsen.

Economic growth for Q2 revised up to 1.4%; jobless claims bump up slightly

Wall Street was also reacting to fresh economic news. U.S economic growth, or GDP, was revised up to 1.4% from a prior reading of 1.1%. And the number of Americans filing for first-time unemployment claims edged up to 254,000.

In individual stock news, shares of soft drink and snack maker Pepsico were up 0.4% after it topped earnings per share estimates by 8 cents and upped its outlook for the year.

Markets around the globe are still reacting to reports that OPEC members have agreed to a crude production cut to help alleviate the global oil glut and help bolster prices. U.S.-produced crude, which jumped more than 5% on the OPEC news Wednesday, was up 77 cents, or  1.6%, to $47.82 per barrel.

Stock markets in Asia gained sharply, playing catch-up to the rally on Wall Street Wednesday that pushed the Dow up 111 points, after a 133-point surge Tuesday.  Japan's Nikkei 225 index gained 1.4%, Hong Kong's Hang Seng index rose 0.5%  and the Shanghai composite in mainland China added 0.4%.

European shares were mixed. The broad Stoxx Europe 600 index was up less 0.1% lower and the DAX index in Germany was down 0.3%. Paris' CAC 40 was up 0.3%.