The R&D Index: Market Watch for the week ending Oct. 28, 2016 closed at 1,489.35 for the 25 companies in the R&D Index. The Index was down -0.85 percent (or 12.8 basis points) over the week ending Oct. 21, 2016. Eleven companies gained value last week from 0.10 percent (Honda) to 2.89 percent (Sanofi). Fourteen companies lost value from -0.40 percent (Toyota) to -6.90 percent (Astra Zeneca). R&D Index member Qualcomm agreed to purchase Dutch automotive chip maker NXP for $39 billion, a record for a semiconductor deal. They expect the deal to close by the end of 2017. Qualcomm finished up 0.69 percent for the week and is 36.8 percent ahead of its value at the beginning of the year.
The U.S.’s gross domestic product (GDP) rose at a 2.9 percent annual rate in the third quarter according to a report issued last week by the U.S. Dept. of Commerce. This was the fastest pace in two years, following three quarters of sub-2 percent growth. However, underlying data reveals slower gains in consumer spending, continued sluggish business investments (including that for R&D), and a housing sector that actually subtracted value from the third quarter’s GDP. The third quarter’s high growth was mainly attributed to increased business inventories and a one-time increase in exports due to a gain in soybean shipments. According to analysts the overall U.S. economy is still showing signs of slowing.
Analysts also noted that many indicators point to an increase in inflation over the next year. As a result, demand for inflation-protected government bonds, commodities and mutual funds, which have hit their highest levels in a year, are rising. Analysts expect annual U.S. inflation to hit 1.75 percent over the next two years and last for a decade at that rate.
Xerox, not an R&D Index member, stated that it has reached an agreement with a major stockholder and now expects to split as forecast by the end of 2016 into a business services company named Conduent and a printer/copier company retaining the legacy name.
The energy price slump continues to affect the earnings of the majors—Exxon, Chevron and Statoil, among others, continued to post third quarter earnings last week below those of a year ago. Energy firm earnings are now the lowest they have been for the past 15 years.
And finally, while U.S. Presidential elections generally slow M&A activity, this year’s race made October the busiest month ever for M&As. In addition to the Qualcomm/NXP item above, AT&T is looking to purchase Time-Warner, Dell has purchased EMC and British American Tobacco has offered $47 billion for Reynolds American.
| Ticker | Exchange | 2015 R&D billions$ | 10/21/16 | 10/28/16 | 10/28/16 to 10./21/16 | 10/28/16 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 59.66 | 59.87 | 0.35% | 7.91% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 35.15 | 34.74 | -1.17% | 0.84% |
| 3 | Roche Holdings | RHHBY | OTC | 10,242 | 29.28 | 28.82 | -1.57% | -16.39% |
| 4 | Toyota | TM | NYSE | 9,112 | 115.27 | 114.81 | -0.40% | -6.69% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 113.44 | 115.33 | 1.67% | 12.28% |
| 6 | Novartis | NVS | NYSE | 8,935 | 75.54 | 71.07 | -5.92% | -17.44% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 116.60 | 113.72 | -2.47% | 8.04% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 32.18 | 31.93 | -0.78% | -1.42% |
| 9 | General Motors | GM | NYSE | 7,500 | 32.04 | 31.32 | -2.25% | -7.91% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 61.20 | 58.84 | -3.86% | 11.40% |
| 11 | Ford Motor | F | NYSE | 6,700 | 12.02 | 11.72 | -2.50% | -16.82% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 30.15 | 30.59 | 1.46% | 12.63% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 37.93 | 38.17 | 0.63% | 4.49% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 30.72 | 28.60 | -6.90% | -15.76% |
| 15 | Honda | HMC | NYSE | 5,990 | 29.79 | 29.82 | 0.10% | -6.61% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 50.02 | 51.00 | 1.96% | -25.87% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 67.93 | 68.40 | 0.69% | 36.85% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 37.75 | 38.84 | 2.89% | -8.93% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 78.25 | 74.53 | -4.75% | -11.53% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 41.13 | 40.14 | -2.41% | -0.52% |
| 21 | IBM | IBM | NYSE | 5,247 | 149.63 | 152.61 | 1.99% | 10.92% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 64.62 | 65.34 | 1.11% | -16.12% |
| 23 | Siemens | SIE | XETRA | 4,929 | 106.45 | 103.55 | -2.72% | 15.21% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 90.33 | 90.72 | 0.43% | -21.93% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 5.10 | 4.87 | -4.51% | -49.32% |
| Total | 175,313 | 1502.18 | 1489.35 | -0.85% | -2.12% | |||
| Biopharmaceutical | 639.84 | 629.82 | -1.57% | -9.34% | ||||
| Automotive | 253.74 | 253.01 | -0.29% | -9.95% | ||||
| ICT | 497.05 | 498.10 | -0.12% | 11.57% | ||||
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 percent 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.
