Trading History: Disney buys Lucasfilm

This week in trading history Disney made one of the smartest acquisitions in American history, stock market circuit breakers tripped for the first time, Philip Morris purchased Kraft foods, and Macy’s was founded...

26th October

General Motors announced that they had lost $567m during the previous quarter. This was the largest quarterly drop ever posted by an American company by that time. However, the magnitude of the loss was somewhat blunted by GM’s tax credits. The auto giant’s pre-tax losses for the quarter was estimated at $953m.

President Reagan’s administration released their report for the fiscal year, announcing that the deficit had ballooned to $110bn. This only grew astronomically as the decade continued. By 1992 the deficit had reached $290bn.

27th October

Roland Macy founded his own department store, Macy’s. The store sold a variety of useful products and was an immediate hit. In 2019, Macy’s was recorded as the largest department store chain in the world with a global revenue of around 21.8bn euros.

Stock market “circuit breakers” tripped for the first time as the Dow plunged 554 points - 7.2%. The trip was triggered by an initial drop in the Dow of 350 points. Trading was halted for 30 minutes until it resumed, only to be tripped again 25 minutes later. The markets closed at 3:30pm and didn’t open again until the next morning. The drop was due to the Asian market crisis. You can see how this started in last week’s Trading History.

28th October

The Dow fell 12.83% in one day, which would later be known as the first “Black Monday”. Trading was so intense on this day that the ticker was running three hours late; the Great Depression had hit America. Although it wasn’t until three years later that stocks eventually bottomed, and the Dow closed at 41.22. In October 2020, the Dow was at 28,335.57.

After closing the markets early the previous day, the U.S. markets opened and the Dow jumped up 337 points and 1 billion shares were traded.

The Dow had its second largest point increase in history, at the time. The Dow closed up 889, a near 11% jump. However, it wasn’t smooth sailing from then on for the index, stocks continued to fall until bottoming on the 9th March 2009.

29th October

Previous records were broken on this day as 16.4 million shares were traded. However, the Dow had dropped 11.73%, down 30.57 points. One day after “Black Monday”, this day is now referred to as “Black Tuesday”. AT&T was down 38%, Standard Oil down 42% and GE was down a huge 58%.

The New York Stock Exchange closed due to hurricane Sandy and stayed closed for the following day. This was the first two-day closure in 124 years. Hurricane Sandy destroyed approximately 300 homes and left hundreds of thousands of New Yorkers without power. The hurricane spread across eight countries and killed 233 people.

30th October

After Black Monday and Black Tuesday, stocks staged a huge one-day rally to attempt to rectify the damage from the previous days. The Dow rose 12.34%. The NYSE announced that trading would only be open for three hours the next day due the volatile price swings and volume.

Philip Morris purchased Kraft Foods for $13.1bn. The deal was in attempt to diversify the company away from the tobacco business, at the time this was the second largest deal in American history.

Disney purchased the owner of the Star Wars and Indiana Jones franchises, Lucasfilm, for $4.5bn. The four Star Wars feature films Disney produced following the purchase grossed more that $4.8bn at the box office alone, making this one of the smartest acquisitions ever made in corporate America.

31st October

Nevada declared a state wide bank holiday, the first in many states that followed. The announcement came after Nevada’s mining and livestock industries were struggling, resulting in a run on more than a dozen banks a week prior to this day.

1st November

The Dow Jones Industrial Average added significant technology exposure and dropped many industrial companies within their index, insinuating the inflating of the tech bubble to investors. Companies like Microsoft, Intel and SBC Communications were added to the index, whilst Chevron, Goodyear Tire and Rubber and Sears Roebuck were dropped.