Overview: loss of confidence deepens and spreads
In the second quarter of 2002 and early in the third, global financial markets were buffeted by a series of disconcerting events that undermined investor confidence. The most significant event was a financial restatement in late June by WorldCom, a major US telecommunications firm. It was apparently the fear of more widespread corporate problems that deepened a slump in equity markets in July in both the United States and Europe. The negative sentiment even spilled over into the once resilient corporate bond market, where issuance slowed as credit spreads widened. In August, an absence of further bad news seemed to restore a degree of confidence. There were signs that investors were returning to the equity and corporate bond markets.
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