A new high for the S&P, a higher minimum wage in Michigan, and black market activity boosting the GDP in Italy top our roundup of the day's top business news stories.
S&P Reaches All-Time High
Encouraged by better-than-forecast economic data, a May surge in consumer confidence and corporate deals, investors Tuesday sent the Standard & Poor's 500 index to a new all-time high, The Associated Press reports. The S&P 500 rose 11.38 points to a record closing high of 1,911.91. The S&P closed above 1,900 for the first time on Friday. The Dow Jones industrial average gained 69.23 points to 16,675.50, and the Nasdaq composite index surged 51.26, to 4,237.07. The Conference Board’s consumer confidence index rose to 83 in May, up from 81.7 last month. Orders for durable goods rose by a better than projected 0.8 percent in April.
Michigan Raises Its Minimum Wage
The Michigan legislature passed a bill Tuesday that would raise the state’s hourly minimum wage in phases from $7.40 until it reaches $9.25 in 2018. Republican Gov. Rick Snyder said he expected to sign it Tuesday night. The law will also tie the minimum wage to inflation, so that it will continue to gradually increase after 2018, The Associated Press reports. In comparison, Vermont's legislature approved a bill earlier this month that will raise the minimum wage to $10.50 by 2018, while raise its minimum wage to $10.10 by the same year. Minimum wage raises have also been approved in Minnesota, Delaware, West Virginia, Connecticut and Hawaii.
It’s Good to be the CEO
The median pay package for a CEO rose above eight figures for the first time in 2013, according to an Associated Press/Equilar pay study. The head of a Standard & Poor's 500 company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012. Last year was the fourth straight that CEO compensation rose following a decline during the Great Recession. The median CEO pay package climbed more than 50 percent over that period. A chief executive now makes about 257 times the average worker's salary, up sharply from 181 times in 2009. More than two-thirds of CEOs at S&P 500 companies received a raise last year, because of the bigger profits and higher stock prices, the study found.
Google Car: No Brakes, No Steering Wheel, No Problem
Google announced Tuesday it is building a car without a steering wheel that will drive itself, The Associated Press reports. The two-seater, which will achieve a top speed of 25 mpg, will have no brake or gas pedals. Instead, it will have buttons for stop and go. The company said it hopes by this time next year there will be 100 prototypes on public roads. The electric-powered car is compact and bubble-shaped and might be used for transporting people around a corporate campus or congested downtown. California's Department of Motor Vehicles must now write regulations for the "operational" use of driverless cars.
Nestle Steps Up Skin Care Bid
Swiss food group Nestle stepped up its drive into the fast-growing skincare market on Wednesday, buying the rights to several treatments for facial lines and wrinkles from Valeant Pharmaceuticals International for $1.4 billion in cash, Reuters reports. Nestle, the world's biggest food group, first signaled its skincare market ambitions last February by taking over the Galderma dermatology venture it had with L'Oreal. The move announced Wednesday's gives Nestle the North American rights to some products taken on in that deal, boosting its control of the brands and avoiding the situation with KitKat, to which rival Hershey owns the rights in the United States, Reuters notes. The U.S. market for Botox and other wrinkle fillers, is set to grow from $2.5 billion in 2013 to $4.7 billion in 2018 - compound annual growth of 13.5 percent. European food groups, struggling with weak economies, are increasingly moving into health and personal care markets in pursuit of higher growth and margins.
Italy to Figure Black Market into GDP
GDP Italian style: The country is changing how it calculates its gross domestic product to include prostitution, illegal drug sales, smuggling and arms trafficking, USA TODAY’s Trish Regan reports. Economists forecast that illegal sales will add 1.3 percentage points to Italy’s GDP this year, but at what cost to its image? Italy is taking more creative measures with its accounting because it wants to (and the European Union needs it to) improve its appearance. A larger overall economy will enable Italy to lowers its debt-to-GDP ratio as well as borrow more money. The move may be considered unorthodox, but it is not illegal, Regan notes. But “investors will learn to dismiss, or at least, discount, Italy's statistics, since they won't be regarded as ‘real.’”