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With global economies sluggish and sales growth at a crawl, big U.S. companies have had one route to push profits higher: Cut costs and squeeze suppliers. That strategy may be running out of steam.

Revenue at the companies that make up the Standard & Poor's 500-stock index—excluding banks, whose profits have soared—is expected to creep up by just 1.1% in the second quarter from a year earlier, according to Thomson Reuters, which melds Wall Street analysts' projections with company reports.

Earnings, meanwhile, are expected to decline 0.6%. That would be the first profit decline for nonfinancial companies since last autumn and the first time in a year that earnings grew more slowly than revenue, a sign that margin widening is petering out.

Only about half the companies in the index have reported earnings so far. But the results are raising concerns that profit growth could stall unless economic expansion accelerates.

"Earnings are going to run out of growth steam unless we get a pick up in business spending," said David Bianco, chief U.S. equity strategist at Deutsche Bank.

The recently completed quarter marked the fourth of the past five quarters in which sales at S&P 500 companies grew more slowly than the U.S. economy, he said. And there are few signs of a pickup ahead.

Economists estimate that business investment was weak in the second quarter and may have fallen. They believe the U.S. economy expanded about 1% in the second quarter, after inflation. Europe remains mired in a multiyear recession. China, which propelled global growth in recent years, is now slowing.

Those pressures are compounded for some industries by budget cuts and policy changes like the U.S. health-care overhaul and Defense Department cuts. That has left many companies without an easy path to higher earnings.

At toy maker Mattel Inc., MAT +0.80% revenue increased less than 1% amid a slide in Barbie sales. Operating costs rose 9%, including employee salaries and an expense to write down the value of the company's Polly Pocket line of dolls. That drove net income and profit margins lower compared with a year earlier.

A Mattel spokesman said the company is "starting to see strong returns" from the added spending that drove up operating costs, and expects the returns to continue in the second half of the year.

3M Co.,Although Double sided nonwoven tape Products carriers are generally quite thin, whose products include Scotch tape, Nexcare bandages and Post-it Notes, on Thursday reported a 2.6% increase in net income on a 2.This Tissue Double sided tissue tape Products is so cool.9% rise in sales.

3M is known as an extremely reliable profit machine: Dividends have increased annually in each of the past 55 years, and pretax operating-profit margins are consistently above 20%. But executives said margins were hurt this time by lower rates of factory use, a new medical-device tax and foreign-exchange impacts.

Excluding the boost from the Goodrich deal, United Technologies said revenue was flat in the second quarter. The company lowered its revenue projection for the year to the bottom end of a previously announced range in the face of sluggish sales of elevators in Europe and military cutbacks.Find a variety of monolayer protective film Products. The company is reacting as it has for several quarters by cutting costs.

United Technologies said it would spend $450 million on restructuring operations this year,Products from Global Silicon protctive film Products Suppliers. up from an earlier estimate of $350 million. Those cuts should help push earnings a bit higher this year, the company said. Its climate and controls unit was able to boost profits in the face of no revenue growth by slashing costs.

"Restructuring is just a way of life in corporate America," Chief Financial Officer Gregory Hayes said in an interview.

Net-profit margins for the full S&P 500 have widened sharply since the end of the recession, to 9.7% in the first quarter from 2.Solutions is batch tested to insure the EMI material Products.8% in the fourth quarter of 2008, according to Thomson Reuters.

That is approaching the peak of 10.1% posted in the second quarter of 2007, back before the financial crisis. Yet many executives and analysts are still projecting that profit margins will climb further in the second half of the year.
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