Wall Street set to open lower as oil, banks weigh

By Yashaswini Swamynathan

REUTERS - Wall Street was set to open lower on Friday, in tandem with oil prices, and as financial stocks came under pressure in the wake of a massive $14 billion fine slapped on Deutsche Bank.

The far bigger-than-expected fine 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 8.5 percent in premarket trading. Dow component Goldman Sachs fell 0.6 percent, while JPMorgan dropped 0.5 percent.

Oil prices fell 1.6 percent on worries of oversupply. Energy stocks were among the biggest losers among S&P 500 components.

Dow e-minis were down 59 points, or 0.33 percent at 8:33 a.m. ET, with 29,133 contracts changing hands.

S&P 500 e-minis were down 8 points, or 0.37 percent, with 262,735 contracts traded.

Nasdaq 100 e-minis were down 16 points, or 0.33 percent, on volume of 39,386 contracts.

Investors also await the Federal Reserve's meeting starting next Tuesday. While traders have very low expectations of an interest rate hike, investors will be keen for commentary on how the central bank views on the recent sluggish economic data.

The data and contrasting comments from Fed officials on rate hikes have caused the markets to oscillate and volatility to spike in the past few days.

"Like it has been before, Mr. Market gets it right in the long term but tends to over react in the short term, and that's what we have seen all this week," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

Volatility may rise again on as Friday, which marks the quadruple witching day, a day when investors unwind interests in futures and options contracts prior to expiration.

Data showed consumer prices increased more than expected in August, pointing to a steady build-up of inflation - a key factor that the Fed considers while deliberating over monetary policy.

Exxon was down 1.28 percent at $83.99 after the Wall Street Journal said the New York Attorney General was investigating the company's accounting practices.

Apple was flat at $115.01. The stock has rallied for four days and been the one bright spot in the market on strong demand for the new iPhones, which hit stores on Friday.

Oracle dropped 2.72 percent to $39.75 after the company forecast lower-than-expected quarterly profit.

Depomed soared 14.2 percent after sources told Reuters the drug maker is preparing to put itself up for sale.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)