The R&D Index: Market Watch for the week ending Aug. 12, 2016 closed at 1,557.13 for the 25 companies in the R&D Index. The Index was up 0.10 percent (or less than 2 basis points) over the week ending Aug. 5, 2016, or a gain of 9.9 percent over the past seven weeks. Only eight of the 25 R&D Index companies saw gains from Apple (0.7 percent) to Siemens (5 percent). Seventeen stocks had losses for the week from Microsoft (-0.03 percent) to Bristol-Myers Squibb (-4.2 percent). For the sixth consecutive week, the average for the automotive R&D Index category rose in value last week, however the average for the ICT R&D Index category fell for the first time in six weeks.
Over the past three months, varying economic news has resulted in see-saw predictions as to whether or not the Federal Reserve will increase short-term interest rates:
8/15 Falling productivity report lowers chance for interest rate hike
8/8 Strong jobs report gives credence for interest rate hike
8/1 Slow economic growth report lowers chance for interest rate hike
7/18 Strong jobs report gives credence for interest rate hike
6/20 Slow economic growth report lowers chance for interest rate hike
6/5 Weak jobs report lowers chanced for interest rate hike
5/31 Strong economic growth report encourages interest rate hike
5/9 Strong market losses dampens interest rate hike
The net result over those three months, of course, has been that the Federal Reserve has not raised interest rates, nor does it seem likely (this week) that they will raise rates at any time this year. The actual raising of an interest rate, however, appears to have relatively little effect on the overall economy, as seen by the implementation of a rate increase at the end of 2015, the first in more than five years.
Yet, even as short-term interest rates and bond rates continue to fall to extremely low levels, relatively few local governments are taking advantage of them. The number of government bonds for supporting infrastructure improvements have fallen to their lowest levels in more than 20 years, according to a recent report by the Wall Street Journal.
Everyone appears to be more cautious in today’s economy. While the economy has some similarities to that of 1999 during the technology bubble period, the valuations are less than half today of what they were in 1999 and the overall investment levels are similarly lower and slower. Similarly, global investors are now reluctant to invest in China’s markets citing last year’s currency devaluation and equities issues.
| Ticker | Exchange | 2015 R&D billions$ | 08/05/16 | 08/12/16 | 8/12/16 to 8/5/16 | 8/12/16 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 57.96 | 57.94 | -0.03% | 4.43% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 34.98 | 34.57 | -1.17% | 0.35% |
| 3 | Roche Holdings | RHHBY | OTC | 10,242 | 32.02 | 31.92 | -0.31% | -7.40% |
| 4 | Toyota | TM | NYSE | 9,112 | 115.96 | 117.79 | 1.58% | -4.27% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 124.24 | 123.22 | -0.82% | 19.96% |
| 6 | Novartis | NVS | NYSE | 8,935 | 83.12 | 82.08 | -1.25% | -4.65% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 107.48 | 108.18 | 0.65% | 2.77% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 35.44 | 34.98 | -1.30% | 8.00% |
| 9 | General Motors | GM | NYSE | 7,500 | 30.80 | 31.57 | 2.50% | -7.17% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 63.86 | 63.35 | -0.80% | 19.94% |
| 11 | Ford Motor | F | NYSE | 6,700 | 12.19 | 12.33 | 1.15% | -12.49% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 31.04 | 30.87 | -0.55% | 13.66% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 41.13 | 41.09 | -0.10% | 12.48% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 34.28 | 33.54 | -2.16% | -1.21% |
| 15 | Honda | HMC | NYSE | 5,990 | 28.96 | 29.15 | 0.66% | -8.71% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 63.28 | 60.63 | -4.19% | -11.88% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 62.00 | 61.71 | -0.47% | 23.47% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 40.32 | 40.16 | -0.40% | -5.84% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 81.56 | 80.22 | -1.64% | -4.77% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 44.89 | 44.17 | -1.60% | 9.47% |
| 21 | IBM | IBM | NYSE | 5,247 | 163.50 | 161.95 | -0.95% | 17.71% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 61.03 | 62.89 | 3.05% | -19.27% |
| 23 | Siemens | SIE | XETRA | 4,929 | 102.30 | 107.45 | 5.03% | 19.55% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 95.87 | 98.10 | 2.33% | -15.58% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 7.31 | 7.27 | -0.55% | -24.35% |
| Total | 175,313 | 1555.52 | 1557.13 | 0.10% | 2.34% | |||
| Biopharmaceutical | 698.88 | 692.37 | -0.93% | -0.33% | ||||
| Automotive | 248.94 | 253.73 | 1.92% | -9.70% | ||||
| ICT | 498.09 | 496.31 | -0.36% | 11.17% | ||||
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.
