The R&D Index: Market Watch for the holiday-shortened trading week ending July 8, 2016 closed at 1,475.63 for the 25 companies in the R&D Index. The Index was up 0.71 percent (or just over 10 basis points) over the week ending July 1, 2016. Seventeen of the 25 R&D Index companies posted a gain for the week from +0.02 percent (Oracle) to +3.82 percent (Intel), while eight companies posted a loss for the week from -0.12 percent (Honda) to -2.96 percent (Siemens).
As was noted last week, the continued rebound in stocks was matched with a fall in government bond yields, which fell once again to record lows (1.366 percent) on Friday. The U.S. Dept. of Commerce also released the June jobs report on Friday which rose to 287,000, significantly above the expected 165,000, thus raising the DJIA and other markets (including the R&D Index) by 251 points or 1.4 percent. With global bond rates at record lows, investors see no other alternative than to invest in stocks, which are likely to remain strong. Technology stocks, which have not fared well lately, helped lead the stock rebound on Friday.
The strength of the hiring report and the resultant stock results renewed some analysts’ expectations once again that the Federal Reserve may yet increase short term-interest rates by the end of 2016.
Energy stocks made some positive movements last week with BP greenlighting a multibillion dollar gas export expansion in Egypt, which matches investments by Italy’s Eni S.p.A. in that area as well. They’re investing now due to current low-drilling costs that accompanied this year’s earlier gas-price declines and the availability of this equipment. These actions may also preclude a return at some point in the future to the $100/barrel prices seen in mid-2014.
The Brexit vote has caused some consternation within the U.K. for its R&D community. Before Brexit, the U.K. contributed about $7.7 billion to the EU for R&D programs, while receiving about $12.5 billion in research grants from the EU. This nearly $5 billion gap will need to be made up by re-worked research collaborations between the U.K. and the EU. Some U.K. researchers are concerned that the new wide-ranging trade relationships that may be created between the U.K. and the EU may negatively affect some of the long-standing research collaborations between the two groups. Recruitment of R&D staff for the U.K. from EU sources may also be put at a temporary disadvantage until some new rules/regulations are put in place, which may take as much as a year to create and install.
| Ticker | Exchange | 2014 R&D billions$ | 07/01/16 | 07/08/16 | 7/8/16 to 7/1/16 | 7/8/16 to 1/1/15 | ||
| 1 | Microsoft | MSFT | NASDAQ | 11,743 | 51.16 | 52.30 | 2.23% | 11.85% |
| 2 | Intel | INTC | NASDAQ | 11,537 | 32.75 | 34.00 | 3.82% | -6.31% |
| 3 | Roche Holdings | RHHBY | OTC | 9,961 | 32.81 | 32.36 | -1.37% | -4.80% |
| 4 | Novartis | NVS | NYSE | 9,086 | 82.71 | 82.13 | -0.70% | -11.36% |
| 5 | Johnson & Johnson | JNJ | NYSE | 8,672 | 121.29 | 122.85 | 1.29% | 17.48% |
| 6 | Pfizer | PFE | NYSE | 8,393 | 35.57 | 36.12 | 1.55% | 15.96% |
| 7 | Toyota | TM | NYSE | 8,141 | 99.64 | 102.07 | 2.44% | -18.66% |
| 8 | General Motors | GM | NYSE | 7,400 | 28.89 | 29.66 | 2.66% | -15.04% |
| 9 | Merck & Co. | MRK | NYSE | 7,180 | 57.94 | 59.35 | 2.43% | 4.51% |
| 10 | Ford Motor | F | NYSE | 6,900 | 12.72 | 13.09 | 2.91% | -15.55% |
| 11 | Cisco | CSCO | NASDAQ | 6,375 | 28.80 | 29.26 | 1.60% | 5.18% |
| 12 | Apple | AAPL | NASDAQ | 6,295 | 95.89 | 96.68 | 0.82% | -12.41% |
| 13 | Sanofi SA | SNY | NYSE | 5,838 | 41.79 | 40.85 | -2.25% | -11.85% |
| 14 | Qualcomm | QCOM | NASDAQ | 5,825 | 53.00 | 54.19 | 2.25% | -27.10% |
| 15 | IBM | IBM | NYSE | 5,595 | 152.35 | 154.46 | 1.38% | -3.49% |
| 16 | Astra Zeneca PLC | AZN | NYSE | 5,579 | 30.42 | 30.11 | -1.02% | -14.44% |
| 17 | Honda | HMC | NYSE | 5,571 | 25.12 | 25.09 | -0.12% | -15.24% |
| 18 | Daimler | DDAIY | OTC | 5,484 | 55.05 | 54.15 | -1.63% | -36.18% |
| 19 | Oracle | ORCL | NYSE | 5,466 | 40.86 | 40.87 | 0.02% | -9.12% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,374 | 43.17 | 43.38 | 0.49% | 1.50% |
| 21 | Siemens | SIE | XETRA | 5,195 | 91.96 | 89.24 | -2.96% | -4.81% |
| 22 | Eli Lilly Co | LLY | NYSE | 4,934 | 78.95 | 79.66 | 0.90% | 15.47% |
| 23 | Ericsson | ERIC | NASDAQ | 4,640 | 7.68 | 7.56 | -1.56% | -37.52% |
| 24 | Bristol-Myers Squibb | BMY | NYSE | 4,534 | 73.78 | 75.28 | 2.03% | 27.53% |
| 25 | Bayer AG | BAYN | XETRA | 4,325 | 90.86 | 90.92 | 0.06% | -19.54% |
| Total | 193,474 | 1465.16 | 1475.63 | 0.71% | -6.68% | |||
| Biopharmaceutical | 690.29 | 693.01 | 0.39% | -3.70% | ||||
| Automotive | 221.42 | 224.06 | 1.19% | -22.83% | ||||
| ICT | 454.81 | 461.76 | 1.53% | -7.76% | ||||
About the R&D Index/Market Pulse
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 2014 were selected based on the latest listings from Schonfeld & Associates’ June 2015 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT (7) and conglomerate (2) organizations who invested a cumulative total of more than $170 billion in R&D in 2014, or approximately 10.8% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2014 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.
The companies used in the R&D Index include Microsoft, Intel, Roche Holdings, Novartis, Johnson & Johnson, Pfizer, Toyota Motor, General Motors, Merck & Co., Ford Motor, Cisco, Apple Computer, Sanofi SA, Qualcomm, IBM, Astra Zeneca plc, Honda Motor, Daimler, Oracle, GlaxoSmithKline, Siemens, Eli Lilly Co., Ericsson, Bristol-Myers Squibb and Bayer AG. Stock prices are based on those stocks traded on the U.S. exchanges. R&D Index trends (in the stock prices) are just one indicator of the amount of capital available to these high-technology companies to invest in R&D and should not be implied to indicate the absolute value of R&D investments made by these organizations. The companies chosen for the R&D Index have very large sophisticated internal and global R&D organizations with each company investing between $4.3 and $11.7 billion annually on their R&D efforts.
