Drumbeat of Weaker Revenues

For the first time in three years, US corporations are poised to report lower sales. From technology to fast food giants, Falling Revenue Dings Stocks

America's largest companies are on track to report lower quarterly sales for the first time in three years, a broad and gloomy verdict on the health of the global economy.

The drumbeat of weaker revenue is particularly troubling to investors looking for a read on the health of the global economy because it reflects underlying demand. Companies have a lot of levers to pull to improve profits: They can sell assets, buy back stock or cut costs. But it is hard to improve sales unless consumers and companies spend more of their money.

The earnings reports are providing a counterweight to optimism triggered by a string of improvements in U.S. retail sales and home sales, data that pointed to an end to the slump in the housing market and a recovery in consumer confidence.

Several corporate chiefs said conditions worsened in the past month of the quarter and pointed to further weakness into next year. That means companies will be under pressure to cut costs and hold back spending to meet their profit targets, potentially putting a further drag on growth.

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