Wednesday's Business Highlights
Wednesday, October 23, 2013
Here are business news highlights from Wednesday.
Crowdfunding to take a leap by seeking investors
WASHINGTON (AP) — Crowdfunding is about to go big time.
For years, filmmakers, artists and charities have used the power of the Internet to generate money for projects. But in the coming year, with the blessing of Congress, startups will be allowed to raise money this way by selling stock to small-time investors.
For those investors, it’s a chance to make a small profit and possibly get in early on the next Twitter or Facebook. But it’s also extremely risky, given that a majority of startups fail. And critics warn that investment crowdfunding is ripe for fraud.
The Securities and Exchange Commission on Wednesday took a step toward implementing the law by proposing how much people could invest and how much companies must divulge. The SEC voted 5-0 to send the proposal out for public comment. Final rules could be approved next year.
Eurozone debt burden rises again in Q2
BRUSSELS (AP) — The eurozone’s debt burden rose further in the second quarter, official figures showed Wednesday, despite years of austerity that one prominent European Union economist says intensified the financial crisis.
Eurostat, the EU’s statistics office, said debt across the 17 countries that use the euro rose to 93.4 percent of the eurozone’s annual gross domestic product from 92.3 percent the previous quarter.
Though countries across the region, such as Greece and Spain, have made great strides in reducing their borrowing through spending cuts and tax increases, they’re still running budget deficits that add to their stockpile of debt.
The eurozone’s economy also isn’t growing fast enough to help lower the debt figures measured relative to total GDP — a sustained period of strong growth would help reduce the debt burden figures.
FedEx expects increase in holiday deliveries
MEMPHIS, Tenn. (AP) — FedEx expects that holiday shoppers will be more nice than naughty this year, with shipments rising from 2012.
The company said Wednesday that it expects to carry more than 22 million shipments on the busiest day of the season, which it believes will be Monday, Dec. 2.
FedEx predicts that shipments in the first week of December will rise 13 percent over last year’s peak week, to more than 85 million shipments, driven by online shopping and retailers stocking up on electronics, apparel and other goods.
Starbucks to open ‘tea bar’ in New York City
NEW YORK (AP) — Starbucks is trying to make tea trendy, with plans to open its first “tea bar” in New York City.
The Seattle-based company says Teavana Fine Teas + Teavana Tea Bar will serve sweets and other food including flatbreads, salads and small plates ranging in price from about $3 to $15. Drink prices will range from $3 to $6, and include novelties such as a Spiced Mandarin Oolong tea and carbonated teas.
The menu of food and freshly made drinks is a switch for Teavana, a chain of about 300 stores that sell boxed and loose tea and accessories. Teavana stores are mainly in shopping malls, but Starbucks CEO Howard Schultz said he plans to expand the footprint to include more locations in urban areas. The company plans to add brewed tea and food to more Teavana stores.
The opening of the New York City store on Thursday comes after Starbucks bought Teavana last year. The company has said it plans to use the acquisition to make tea a bigger part of American culture, as it has with coffee.
700 IRS contract workers owe $5.4M in back taxes
WASHINGTON (AP) — Nearly 700 employees of Internal Revenue Service contractors owe $5.4 million in back taxes, said a report Wednesday by the agency’s inspector general.
More than half of those workers are supposed to be ineligible to do work for the IRS because they are not enrolled in installment plans to pay the taxes they owe.
Unlike other federal agencies, the IRS requires employees and those who work on agency contracts to comply with federal tax laws. That means they have to file returns on time and either pay all the taxes they owe or enroll in a payment plan.
Accelerating deliveries drive Boeing 3Q profits
Faster airplane production is going straight to Boeing’s bottom line.
Third-quarter net income rose 12 percent as the company delivered planes to customers at a quicker pace. It has already sped up the assembly of two of its planes — the 737 and 777 — and on Wednesday announced plans to boost production of its new 787 Dreamliner, too.
Boeing raised its profit guidance for the full year.
Trial starts; Is Detroit eligible for bankruptcy?
DETROIT (AP) — An attorney representing Detroit urged a judge Wednesday to allow the city to fix staggering financial problems through bankruptcy, arguing that without it nearly 65 cents of every tax dollar eventually would be gobbled up by debts and other obligations.
The extraordinary trial, expected to last days, brings the bankruptcy case to its most crucial stage since Detroit in July made the largest public filing in U.S. history. If a judge finds certain legal requirements were met, the city would get the green light to restructure $18 billion in debt and possibly slash pensions for thousands of people, the most controversial target so far.
Hundreds of protesters walked in a circle outside the courthouse with signs that said, “Bail out people not banks.”
The Dow Jones Industrial Average fell 54.33 points to close at 15,413.33. The Standard & Poor’s 500 index fell 8.29 points to 1,746.38. The Nasdaq composite fell 22.49 points to close at 3,907.07.
Benchmark U.S. crude for December delivery fell $1.44 to $96.86 a barrel in New York. Wholesale gasoline fell 6.5 cents to close at $2.552 a gallon. Natural gas rose 3.8 cents to close at $3.619 per 1,000 cubic feet. Heating oil fell 7.4 cents to close at $2.923 a gallon.
Brent crude, which is used to price international oil used at many U.S. refineries, was down $2.17 to $107.80 per barrel.
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