Corporate America braces for impact

BOSTON (Reuters) - With stock markets falling, the U.S. housing market in a tailspin and credit tightening, corporate America is bracing for impact.

The economic contagion that started with a slump in U.S. home prices and spread throughout the financial sector as default rates on risky subprime mortgages rose has spooked investors the world over.

Top U.S. executives said they are preparing themselves for the possible spread of the effects of the slowing economy.

Department store chain J.C. Penney regards "pretty negative sentiment" as a business reality for the near future, its chief executive said on Thursday.

"There's going to be up and down cycles in the business," said Mike Ullman, CEO of the Plano, Texas-based chain. "Our responsibility is to find a way to perform whatever the environment, despite a pretty negative sentiment in the market place, particularly about housing and energy."

Deere & Co., which makes heavy equipment used in construction and agriculture, has already started to brace for slower demand, a top executive said on Wednesday, even as the company reported better-than-expected profit.

"We have tried to be very responsive to the downturn by stepping on the brakes aggressively on our production," said Mike Mack, chief financial officer of Moline, Illinois-based Deere. "Everybody is getting a chance to watch this volatility in this market and try to understand what the impact is going to be on housing starts."

A U.S. Commerce Department report on Thursday showed the number of new homes on which construction started in July was at its lowest level in 10 years.

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