While you were sleeping: UPDATED Financial stocks slide on Wall Street

Wall Street dropped, with financial and health care stocks leading the way.

Financial shares including Goldman Sachs fell amid concern about the industry because of Deutsche Bank, which is fighting a $US14 billion claim from the US Justice Department to settle an investigation.

A number of funds that clear derivatives trades with Deutsche Bank have withdrawn some excess cash and positions held at the lender, a sign of counterparties' mounting concerns about doing business with Europe's largest investment bank, Bloomberg reported.

"The chatter is adding a lot of short-term fear right now, especially in the financials sector," Jonathan Corpina, senior managing partner at Meridian Equity Partners, told the Wall Street Journal.

At the close, the Dow Jones Industrial Average was down 195.79 points, or 1.1% to 18,143.45, while the Nasdaq Composite Index declined 0.9% to 5269.15. The Standard & Poor's 500 Index also dropped 0.9% to 2151.13.

In the Dow, slides in shares of Goldman Sachs and those of pharamaceutical company Merck, last down 2.8% and 2.4% respectively led the decline. Bucking the trend were shares of Caterpillar and those of Verizon Communications, up 1.2% and 0.3% respectively.

GDP rises faster in second quarter
Meanwhile, investors are eyeing a speech from Federal Reserve chairwoman Janet Yellen for any fresh clues on the timing of a central bank interest rate increase.

A Commerce Department report showed US gross domestic product rose at a 1.4% annual pace in the second quarter, up from the 1.1% rate reported last month and exceeding analysts' estimates.

"It now appears that growth is slowly making its way back on to firmer ground," Michael Feroli, an economist at JPMorgan in New York, told Reuters.

Also moving to firmer ground were shares of ConAgra Foods, which jumped after the company posted better-than-expected quarterly earnings on improved margins. The stock rose 7.2% for the biggest jump in the S&P 500.

Earnings from continuing operations rose to 61USc  last quarter, and up from 41USc  in the year-earlier period, the company said. Analysts estimated 48c on average, according to Bloomberg and Reuters.

"Our efforts to infuse focus and discipline into our consumer businesses are clearly enabling us to expand our margins as we build a higher-quality revenue base, improve efficiency, and deliver stronger, more consistent performance," Sean Connolly, chief executive officer of ConAgra Foods, said in a statement.

Qualcomm acquisition rumoured
Shares of Qualcomm rose 6.3% after the Wall Street Journal reported the company was in talks to acquire Dutch firm NXP Semiconductors, which rose 17%.

Oil advanced 1.7% to $US47.83 a barrel after the Organisation of Petroleum Exporting Countries unexpectedly agreed to pare output in a bid to encourage non-Opec producers to do the same and ease the global glut, and bolster prices.

The plan to cut output, which would be the first time it has done so in eight years, will be finalised at a November meeting.

In Europe, the Stoxx 600 Index finished the day with an increase of less than 0.1%.

France's CAC 40 Index gained 0.3%, while the UK's FTSE 100 Index rose 1% and Germany's DAX Index fell 0.3%, as Deutsche Bank shares closed 6.6% lower.

(BusinessDesk)