American investors shrug off jitters

As they prepared to ring the opening bell on Wall Street yesterday morning, there were plenty expecting it would knell a day of disaster after WorldCom's calamitous fall.

Instead, buoyed by better than expected economic data, which appeared to calm the jitters of investors, stocks clung on to modest gains and the Dow-Jones was at 9255 by mid-afternoon. Those economic figures, from the US Commerce Department, showed the economy was springing back from last year's recession, growing at an annual rate of 6.1 per cent in the January-March quarter, the strongest in more than two years.

"We continue to get positive reports on how the economy is doing and that is starting to overshadow all of the concerns about corporate governance and accounting irregularities," Stephen Massocca, president of the investment bank Pacific Growth Equities, said.

Another government report showed the number of people claiming unemployment benefit fell last week, more evidence of a modest improvement. "These numbers support the view that the economy is on a recovery path," said Richard Cripps, chief market strategist at Legg Mason Wood Walker.

But while the stock market may be staging a recovery – rebounding as investors moved in to snap up shares whose value plunged because of WorldCom's disclosures – healing the impression that something is seriously wrong at the heart of US corporate culture is going to take much longer.

One commentator wrote: "It was not just WorldCom that took a beating. It was also the United States itself, and the American gospel of how business should be done. People around the world who for decades have looked to the United States as the model for openness and accountability in business have been sorely disillusioned by the mounting waves of scandal."