Reuters reported that Corporate America's hopes for a second half pickup in the US economy dimmed as companies from Emerson Electric Co to Corning Inc warned of weakening demand for everything from industrial equipment to televisions.

Their cautious words, coupled with weak earnings reports from Delta Air Lines Inc and health insurer WellPoint Inc spooked investors who are already on edge over the US debt ceiling standoff, sending the broad Standard & Poor's 500 index down more than 1%. The words marked a change in tone for big companies, many of which had previously been calling for demand to pick up later in the year.

Executives warned that the long awaited rebound in consumer spending is not materializing, as the nation's stubbornly high unemployment leaves many families with less disposable income. Adding to their worries, the industrial demand that so far has helped prop up a sluggish economy, is starting to fade.

Emerson Electric said in a filing with the US Securities and Exchange Commission that "We have seen a definite weakening of general business activity in June and July."

It noted that its order growth slowed in the three months ended in June 2011. It said that "US and European economies have clearly slowed and entered a soft patch and it remains unclear if they will improve much in the second half of the calendar year."

Mr Shannon O'Callaghan analyst at Nomura said that "Emerson's management team has their finger on the pulse of the global economy pretty well. Their upfront statement is sending a message about a broader slowdown."

Analysts said that even companies that posted better than expected results, including Boeing Co, did so largely on cost cutting. Two of the US economy's biggest structural weaknesses, the rising cost of energy and healthcare, also played a role in wave of worry.

Even debt ratings agency Moody's Corporation, which reported a 56% rise in second quarter profit, warned things are going to get tougher, as the European sovereign debt crisis and the risk of the United States losing its top tier AAA credit rating scare off potential bond issuers.

Mr Raymond McDaniel CEO at Moody's Corporation said that "We expect more challenging debt issuance conditions in the US and Europe in the second half of 2011 as compared to the first half of the year."

(Sourced from www.reuters.com)