The R&D Index for the week ending December 21, 2018 closed at 3,805.86 for the 25 companies in the R&D Index. The Index was down -8.49% (or -353.32 basis points) from the week ending December 14, 2018. The stock of all 25 R&D Index members lost value from 0.08% (GlaxoSmithKline) to 13.47% (Amazon). Two-thirds of the R&D Index members’ stock values are now below what they were at the beginning of 2018.

The DJIA and Nasdaq stock market had its worst week last week since 2008, while the S&P 500 had its worst week since 2011. All three indexes are on track to have their biggest monthly losses since October 2008. Recession and trade war fears along with the Federal Reserve’s decision on Wednesday to raise short term interest rates a fourth time for 2018 to a range between 2.25% and 2.50% were the primary events causing the broad sell-off in which the volume was twice the daily average for 2018. The declines since August have erased $1.2 trillion in market value from the big five—R&D Index members Amazon, Google and Apple, along with Netflix and Facebook. At the present time, this stock volatility is not expected to affect R&D spending from these companies. Oil prices continued their recent slide and the latest evaluations note that the recent oversupply is being joined by a weaker demand, the lowest since 2011, as well. If these trends continue, the net effect could lower energy companies’ R&D investments in 2019.

The Fed, in its comments to the rate rise, stated that it would review all economic indicators in 2019 before making additional adjustments. The Fed suggested it may only make two rate increases in 2019, down from its previous three increases.   

The majority of market analysts continue to talk market confidence and that 2019 will see growth, albeit slower than 2018. Wage growth, lower unemployment, modest savings and a possible slowdown in the rate of interest rate increases in 2019 are these drivers. Consumer confidence and spending remain high, however demand for durable goods may show signs of weakening.

Corporate R&D spending in China is growing at a faster pace than anywhere else in the world, according to the 2018 EU Industrial R&D Investment Scoreboard. Chinese companies spent 20% more on R&D in 2018 than they did in 2017. These same companies spent 5.5% more in 2017 than they did in 2016.

				R&D Index Week Ending December 21, 2018
		Ticker	Exchange	2018 R&D millions U.S. $	12/14/18	12/21/18	12/21/18 to 12/14/18	12/21/18 to 12/29/17
1	Amazon	AMZN	NASDAQ	26,750	1,591.91	1,377.45	-13.47%	17.78%
2	Alphabet/Google	GOOGL	NASDAQ	18,796	1,051.71	991.25	-5.75%	-5.90%
3	Apple	AAPL	NASDAQ	14,037	165.48	150.73	-8.91%	-10.93%
4	Intel	INTC	NASDAQ	13,702	47.86	44.84	-6.31%	-2.86%
5	Microsoft	MSFT	NASDAQ	13,558	106.03	98.23	-7.36%	14.84%
6	Roche Pharm	RHHBY	OTC	12,284	31.09	30.20	-2.86%	-4.37%
7	Johnson & Johnson	JNJ	NYSE	11,493	133.00	128.09	-3.69%	-8.32%
8	Merck & Co.	MRK	NYSE	11,323	76.48	72.90	-4.68%	29.55%
9	Volkswagen AG	VWAGY	OTC	10,915	16.40	16.07	-2.01%	-60.26%
10	Toyota	TM	NYSE	10,848	120.10	113.96	-5.11%	-11.96%
11	Novartis	NVS	NYSE	8,934	87.39	83.35	-4.62%	-0.73%
12	Honda	HMC	NYSE	8,180	26.91	25.90	-3.75%	-24.00%
13	Pfizer	PFE	NYSE	7,942	43.80	41.93	-4.27%	15.76%
14	Daimler	DDAIY	OTC	7,615	53.31	52.50	-1.52%	-37.91%
15	General Motors	GM	NYSE	7,278	35.10	32.98	-6.04%	-19.54%
16	Oracle	ORCL	NYSE	7,001	46.60	44.00	-5.58%	-6.94%
17	Bristol-Myers Squibb	BMY	NYSE	6,981	52.12	49.82	-4.41%	-18.70%
18	Eli Lilly Co	LLY	NYSE	6,769	111.93	109.42	-2.24%	29.55%
19	GlaxoSmithKline	GSK	NYSE	6,394	37.61	37.58	-0.08%	5.95%
20	Cisco	CSCO	NASDAQ	6,009	45.82	41.85	-8.66%	9.27%
21	IBM	IBM	NYSE	5,842	119.90	110.94	-7.48%	-27.69%
22	Bayer AG	BAYN	OTC	5,743	17.81	17.19	-3.48%	-44.71%
23	Astra Zeneca PLC	AZN	NYSE	5,483	39.15	37.51	-4.19%	8.10%
24	Qualcomm	QCOM	NASDAQ	5,183	57.62	54.85	-4.81%	-14.32%
25	Sanofi SA	SNY	NYSE	4,694	44.05	42.32	-3.93%	-1.58%
	Total			243,754	4,159.18	3,805.86	-8.49%	0.37%
			Biopharmaceutical		674.43	650.31	-3.58%	1.97%
			Automotive		251.82	241.41	-4.13%	-26.23%
			ICT		1,641.02	1,536.69	-6.36%	-7.28%

About the R&D Index

R&D Magazine’s R&D Index is a weekly stock market summary of the top international companies involved in research and development. The top 25 industrial spenders of R&D in 2017 were selected based on the latest listings from Schonfeld & Associates’ June 2018 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT (8) and conglomerate (1) organizations who invested a cumulative total of more than $209 billion in R&D in 2017, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2018 Global R&D Funding Forecast. The stock prices used in the R&D Index are tabulated from NASDAQ, NYSE, XETRA and OTC common stock prices (in U.S. dollars) for the companies selected at the close of stock trading business on the Friday preceding the publication of the R&D Index in R&D Magazine’s R&D Daily eNewsletter.