Stocks close mixed as casino shares deal a blow Dow up 9.78 Gaming decline offsets drug rally

WALL STREET

October 21, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks closed mixed yesterday as a rout in casino and pollution-control shares offset a rally in drug companies.

Casino stocks slumped after Circus Circus Enterprises Inc. released a pessimistic earnings outlook, while waste-management stocks fell amid lower-than-expected earnings from WMX Technologies Inc.

Casino stocks have "been very hot, and they're cooling off," said Kurt Feuerman, who manages about $1 billion in large-capitalization growth stocks for Morgan Stanley Asset Management.

The Dow Jones industrial average closed up 9.78, at 3,645.10, approaching its record 3,652.09, set Aug. 25.

The Standard & Poor's 500 finished 0.14 lower, at 466.07, after rising as high as 466.87 yesterday. The decline was led by WMX Technologies and Promus Cos., an operator of casinos. The S&P 500 closed at a record 469.5 last Friday.

The Nasdaq Combined Composite closed down 0.46, at 768.25, extending Tuesday's 14.20-point slide. It had risen as much as 3.38 points to 772.09 yesterday. The Nasdaq hit a closing high of 787.42 last Friday.

Pollution-control and tobacco shares paced the market's decline, countering a rise in drug stocks.

WMX Technologies tumbled $4.75, to $24.125, after third-quarter earnings from operations fell below investor expectations. Profit from operations fell to $186.2 million, or 39 cents a share, from $216.8 million, or 44 cents.

Philip Morris fell $1, to $51.75, after dropping $1.125 Tuesday, when the food and tobacco company reported a 25 percent decline in third-quarter earnings.

Casino stocks tumbled after Circus Circus Enterprises said third-quarter earnings wouldn't be as strong as investors have expected.

Circus Circus, hurt by management upheaval this year and the high costs of opening new resorts, said it expected third-quarter profit of 36 to 40 cents a share, down from 42 cents a year ago.

Circus Circus stock sank $4.75, to $39.625. Its outlook triggered declines in other gaming operators. Promus Cos. closed down $4, at $74.625 even though it posted a 32 percent increase in third-quarter earnings Tuesday. Promus stock has quadrupled this year.

Mirage Resorts Inc. tumbled $3.625, to $52.375, and Caesars World Inc. dropped 50 cents, to $47.

"The basic theme of the market this week is, if it's gone up a lot, take it down," said Morgan Stanley's Mr. Feuerman. He said he would buy Promus, Caesars World and Mirage, as well as International Game Technology Inc., a maker of slot machines, after yesterday's drop.

Among the drugmakers, Upjohn Co. rose $3, to $35 amid optimism about the prospects for a new drug tested in patients at risk of stroke. Pfizer gained $1.375, to $64.375.

Stocks rallied at the opening amid better-than-projected earnings from Compaq Computer Corp. and Dean Witter Discover & Co., only to flag later in the session.

Nine stocks fell for every seven that rose on the New York Stock Exchange. Trading was active, with about 307 million shares changing hands on the Big Board.

Compaq stock closed up $2.375, at $64.75. The computer maker fTC said yesterday that third-quarter earnings more than doubled, to $1.25 a share, from 61 cents a year ago, surpassing analysts' estimates of $1.04 a share, according to Institutional Brokers Estimate System.

Sybase closed down $1.25, to $68.50, even though the data base software maker said third-quarter earnings soared 88 percent and declared a 2-for-1 stock split.

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