September 16, 2016 / 1:57 PM / 2 years ago

CORRECTED-US STOCKS-Wall Street weighed down by banks, energy stocks.

(Corrects to clarify U.S. Department of Justice is demanding a $14 billion settlement in talks with Deutsche Bank, but has not yet levied a fine. Changes throughout)

* Deutsche fine risk weighs on Goldman, JPMorgan, other banks

* Quadruple witching day likely to lead to volatility

* Intel gives top boost to S&P, Nasdaq after raising forecast

* Indexes down: Dow 0.49 pct, S&P 0.47 pct, Nasdaq 0.28 pct

By Yashaswini Swamynathan

Sept 16 (Reuters) - Wall Street was lower on Friday as a drop in oil prices weighed on energy stocks and as financials came under pressure in the wake of the possibility of a massive $14 billion fine on Deutsche Bank.

The settlement proposal, made during negotiations between the U.S. Department of Justice and Deutsche Bank over claims that the German bank missold mortgage-backed securities, was larger than expected. Deutsche’s U.S.-listed shares were down 9 percent.

Dow components Goldman Sachs and JPMorgan fell 1 percent each. The S&P 500 financial index dropped 1.01 percent, the biggest among the 10 major S&P sectors.

The energy index was a close second, declining 0.94 percent as oil prices fell 2.2 percent on worries of oversupply.

At 9:39 a.m. ET (1339 GMT), the Dow Jones industrial average was down 90.12 points, or 0.49 percent, at 18,122.36.

The S&P 500 was down 10.13 points, or 0.47 percent, at 2,137.13. All the benchmark’s major sectors were lower.

The Nasdaq Composite was down 14.61 points, or 0.28 percent, at 5,235.08.

Helping the tech-heavy index was Intel’s 3.14 percent gain after the chipmaker raised its third-quarter revenue forecast.

However, Oracle was a drag, dropping 2.72 percent to $39.75 after it issued a disappointing quarterly profit.

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 when investors unwind interests in futures and options contracts prior to expiration.

Declining issues outnumbered advancing ones on the NYSE by 1,980 to 685. On the Nasdaq, 1,452 issues fell and 830 advanced.

The S&P 500 index showed three new 52-week highs and no new lows, while the Nasdaq recorded 27 new highs and 13 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D’Souza)

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