US stocks suffer worst first half for 30 years

PUBLISHED : Sunday, 30 June, 2002, 12:00am
UPDATED : Sunday, 30 June, 2002, 12:00am

Stocks in the United States have ended the worst first half in 30 years, with analysts seeing little reason for a rebound in the next three months after a rash of corporate scandals.

Although there is some hope earnings will improve, analysts say many investors have become so disillusioned that it will take a sustained dose of good news to turn the market around.

Leading indices were pummelled by corporate scandals in the second quarter, leaving the Standard & Poor's 500 Index with its steepest first-half decline in 30 years at 13.8 per cent. The Nasdaq Composite Index completed its worst first half since 1974 with a decline of 25 per cent. The Dow Jones Industrial Average has fallen 7.8 per cent this year.

US stocks ended flat on Friday, sealing the first weekly gain since mid-May as investors shrugged off the latest scandal even after Xerox said it had to restate billions in revenues. The Nasdaq and S&P both dipped beneath their post-terror attack lows on Wednesday.

Tanrich Asset Management director Kennis Leung said: 'Capital expenditure remains relatively low and we have had a series of corporate incidents that have hurt investor confidence.'

She said the fundamentals of the US economy were not bad but investors were not responding to the positive news.

A weaker US dollar and the threat of further terrorist attacks and scandals would weigh in the second half, she said.

For the first half, the Hang Seng Index remains a laggard compared with its regional neighbours, down 7.1 per cent on the year. Analysts expect the index to trade between 12,000 and 14,000 points by year-end, with strong support at the 10,000 level.