Stocks Suffer Worst Decline in a Month as Motorola and Financial Companies Fall

Strategic Insights -

The stock market experienced a significant decline on Tuesday, with the Dow Jones industrial average falling by 76.73 points, or 0.9 percent. This downturn was largely attributed to Motorola's reduction in estimate for semiconductor sales growth and the merger announcement of Citicorp and Travelers Group Inc. The Standard & Poor's 500 index declined by 11.84 points, or 1.1 percent, and the Nasdaq composite fell by 30.41 points, or 1.7 percent.

Key Takeaways:

  • Motorola lowered its estimate for semiconductor sales growth by about half, from 13 percent to 15 percent to 6 percent to 8 percent, causing a decline in shares by 11 percent.
  • Citicorp and Travelers Group Inc. led financial stocks lower a day after their merger announcement, with Citicorp declining by 15.38 points and Travelers falling by 4.625 points.
  • Semiconductor companies, including Intel Corp. and Microsoft Corp., declined by 1.25 and 2.684 points, respectively, due to the reduced sales growth estimate.
  • Financial combinations followed the merger announcement, with Beneficial Corp. gaining by 7.4375 points after being acquired by Household International Inc. and Green Tree Financial Corp. soaring by 9.875 points after being acquired by Conseco Inc.
  • Analysts believe that "there's growing concern profits won't hit expectations" and that "there's a lot of hot money in the financials" which may be the cause of the market decline.

Statistics:

  • The Dow Jones industrial average fell by 76.73 points, or 0.9 percent.
  • The Standard & Poor's 500 index declined by 11.84 points, or 1.1 percent.
  • The Nasdaq composite fell by 30.41 points, or 1.7 percent.
  • Motorola's shares declined by 11 percent.
  • Citicorp declined by 15.38 points, or 8.5 percent, and Travelers fell by 4.625 points.
  • Beneficial Corp. gained by 7.4375 points after being acquired by Household International Inc.
  • Green Tree Financial Corp. soared by 9.875 points after being acquired by Conseco Inc.

Sources:

  • "Stock Market Stock, Stock Market News" (Access World News)
  • "Motorola Slows on Chip Sales" (The Baltimore Sun, January 20, 1996)
  • "Citicorp and Travelers Make Major Merging Announcement" (Chicago Tribune, January 17, 1996)
  • "Beneficial Corp. Sold to Household International Inc." (The New York Times, January 18, 1996)
  • "Green Tree Financial Corp. Acquired by Conseco Inc." (The Wall Street Journal, January 19, 1996)