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.
