Profit margins

I recently penned a column pointing out that when America "lost" the TV manufacturing industry to Japan, it wasn't necessarily a bad thing, because the business has become a low-margin money loser. A lot of readers disagreed.

Starbucks is hiking the price of its packaged coffee by 17% to compensate for a steep increase in Arabica coffee prices. Customers habituated to Starbucks coffee might keep splurging on its products, but some analysts believe the passing on of its costs will affect Starbucks' top line.

Wall Street will watch second quarter earnings for telltale signs that the economy has slowed or that corporate margins are even tighter than is feared. But the ones reporting negative outlooks are likely to go back to the same old solution they used so often in recent years: layoffs.

The S&P 500 was up by only 4% in the first half of 2011, and it fell about 1% in the second quarter. Will it end there? A sell-off may be about to begin that would take the index lower for the full year. Here are half a dozen reasons why one of history's most impressive stock market runs may have ended.

After the losses of the past week, it seems hard to imagine that the S&P 500 has much further to decline. But the index took a fall to near 1,000 as recently as last July, and the issues that punished the markets then are looming over the economy again -- or perhaps, still.

McDonald's expects food costs to rise between 4% and 4.5% in the U.S. and Europe this year, which puts the fast food leader between a rock and a hard place: Leave prices the same, and profit margins suffer. Raise them, and cash-strapped customers may start foregoing their Big Macs.

Consumer and investor confidence show signs of mending, but rekindled fears of inflation are on the rise as well. As costs rise, that could also hammer the profit margins of many companies -- a possibility that is already taking a toll on stocks.

Netflix's deal with Epix to add movies from Paramount, Lionsgate and MGM to its Watch Instantly service drew bearish reactions from analysts and investors. But the needed deal will help Netflix gain a winning position in the long run.

Grocery chain Supervalu reported a net income of 31 cents per share this morning for the last quarter, which ended May 10, a 40% decline year-over-year. An after-tax charge of 12 cents per share that brought the figure down, but the quarter was still a disappointment.