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Survey: Reforms Would Benefit Market, But Economics Will Do More

By John S. McClenahen Investors believe that certain government actions will help improve U.S. stock market performance. For example, 64% of the investors responding to this month's UBS Warburg/Gallup Poll judge that new Securities & Exchange Commission rules on accounting practices will have a major impact on financial markets. And 60% foresee a similar impact from strict prison sentences for corporate managers convicted of fraud. However, investors foresee improved economic conditions having an even greater impact on the financial markets. Some 77% say economic improvement will have a "fairly or extremely large" impact. Although the poll did not ask for specifics, presumably the investors surveyed remain concerned about lower-than-expected inventory levels and a higher-than-anticipated U.S. international goods and services trade deficit during 2002's just-competed second quarter. Otherwise, U.S. economic fundamentals -- including inflation -- are encouraging.

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