The R&D Index: Market Watch for the week ending February 3, 2017 closed at 1,569.35 for the 25 companies in the R&D Index. The Index was up 0.36% (or 5.61 basis points) over the week ending January 27, 2017. Fifteen R&D Index companies gained value last week from 0.23% (Johnson & Johnson) to 6.35% (Bristol-Myers Squibb). Ten R&D Index companies lost value last week from -0.83% (IBM) to -4.34% (Daimler).
In its regular meeting last Wednesday, the Federal Reserve stated that it remains on track to raise short-term interest rates this year, but gave no indication of when the next increase might come—the current benchmark rate is in a range between 0.50% and 0.75%. They noted that indicators are still positive with the latest consumer confidence numbers rising slightly. Consumer inflation rates rose 1.6% from 2016 rates, still below the 2.0% rate that the Fed has targeted. Fed Chair Janet Yellen is scheduled to testify before Congress on February 14-15 and analysts look to see what she says about the U.S. economy at that time. The next Fed meeting, when rates might be raised is on March 14-15.
On Friday, the Department of Labor reported that the U.S. economy had added 227,000 jobs in January, however wage growth was only up 0.1% from December resulting in an overall wage increase of 2.5% from this time in 2016, a rate that will likely delay any new Fed interest rate increases for a couple of months, according to economists.
Toshiba announced last week that it will stop building nuclear power plants after incurring about $6 billion in losses from its U.S.-based Westinghouse Electric division. Toshiba will still sell nuclear power plant designs, but will assign the task/risk of building the facilities to other companies, an approach it already takes in its China-based projects. Toshiba was expected to spend about $2.3 billion on R&D in 2017, a 7% drop from its R&D investments in 2016.
U.S.-based R&D Index members General Motors and Ford saw their auto sales fall 3.8% and 0.7% respectively in January compared to the same time in 2016. While still producing at near-record rates, the companies saw their inventories rise at the end of 2016 and have now begun cutting most production rates (and jobs), except for truck output which continues to grow. Fiat Chrysler and Toyota sales also declined 11.2% and 11.3% respectively, while Honda sales actually rose 5.9%.
In a survey of petroleum producers, it was noted that smaller shale-oil producers are agressively raising their research budgets for 2017 following a modest recovery in crude prices. The international oil giants, including Exxon Mobil, Chevron, Royal Dutch Shell and BP, however are taking a more cautious position and plan to hold back their research spending for the time being.
|R&D Index Week Ending February 3, 2017|
|Ticker||Exchange||2015 R&D billions$||01/27/17||02/03/17||2/3/17 to 1/27/17||2/3/17 to 1/1/16|
|5||Johnson & Johnson||JNJ||NYSE||9,046||113.38||113.64||0.23%||10.63%|
|10||Merck & Co.||MRK||NYSE||6,704||61.75||64.29||4.11%||21.72%|
|14||Astra Zeneca PLC||AZN||NYSE||5,997||27.05||27.92||3.22%||-17.76%|
|19||Eli Lilly Co||LLY||NYSE||5,331||75.38||77.23||2.45%||-8.32%|
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 2015 were selected based on the latest listings from Schonfeld & Associates’ June 2016 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 $175 billion in R&D in 2015, or approximately 11% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2016 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 $4.1 and $12.4 billion annually on their R&D efforts.