The R&D Index: Market Watch for the week ending October 14, 2016 closed at 1512.20 for the 25 companies in the R&D Index. The Index was down 1.50 percent (or 23.0 basis points) over the week ending October 7, 2016. Only four companies gained value last week from 0.45 percent (Daimler) to 3.13 percent (Apple). Twenty-one companies lost value from -0.17 percent (Honda) to -23.74 percent (Ericsson). Apple’s large gain was due in part to its continued greater than expected growth in and the carry-over in possible Apple sales following Samsung’s decision to stop production of its top-end Note cell phones due to battery-fire issues. Ericsson’s large loss is due to the announcement on Wednesday of significantly lower third-quarter results and continued low forecasts and expectations. Ericsson shares have lost more than half their value in the past 18 months.
The minutes for the Federal Reserve’s September 21, 2016 meeting were released last week and they revealed mixed opinions from Fed officers concerning the timing for the release of the next short-term interest rate, which is now expected following the Fed’s December 14th regularly scheduled meeting. Included the Fed’s minutes were economic projections for the U.S. through 2019, which were slightly more optimistic (0.1 percent to 0.2 percent) than the IMF’s projections released on October 3, 2016.
The British pound also continued it slide, hitting new alltime lows on Tuesday, October 14, against foreign currencies. Since the Brexit vote, British currency has fallen and its trade-weighted index has dropped by more than 15 percent. The pound rose on Wednesday against the U.S. dollar to $1.2207.
The Wall Street Journal’s monthly survey of economists last week put the chances of seeing a recession is the U.S. in the next four years as 60 percent. The basis for this forecast is historical precedents. For the past 250 years, the American economy has never grown for more than 10 years without a recession. The economists believe that some unknown economic shock will hit the U.S. economy in the next four years that will knock it off its growth curve, which began in June 2009.
News on thursday of a sharp decline (10 percent year over year) in China’s exports caused a short blip in global stock and bond prices, although U.S. stock indexs recovered later in the day. The DJIA initially dropped more than 10 percent, before settling on a less than 0.5 percent decline for the day. Weaker than expected Chinese trade, coupled with the unsure timing of the Fed’s next rate increase, have increased concerns that global growth will further slow global growth.
| Ticker | Exchange | 2015 R&D billions$ | 10/07/16 | 10/14/16 | 10/14/16 to 10/7/16 | 10/14/16 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 57.80 | 57.42 | -0.66% | 3.50% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 38.10 | 37.45 | -1.71% | 8.71% |
| 3 | Roche Holdings | RHHBY | OTC | 10,242 | 30.49 | 29.69 | -2.62% | -13.87% |
| 4 | Toyota | TM | NYSE | 9,112 | 115.89 | 115.09 | -0.69% | -6.46% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 119.24 | 117.56 | -1.41% | 14.45% |
| 6 | Novartis | NVS | NYSE | 8,935 | 78.29 | 76.09 | -2.81% | -11.61% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 114.06 | 117.63 | 3.13% | 11.75% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 33.56 | 32.66 | -2.68% | 0.83% |
| 9 | General Motors | GM | NYSE | 7,500 | 32.34 | 31.87 | -1.45% | -6.29% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 62.77 | 62.14 | -1.00% | 17.64% |
| 11 | Ford Motor | F | NYSE | 6,700 | 12.29 | 11.91 | -3.09% | -15.47% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 31.47 | 30.18 | -4.10% | 11.12% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 38.71 | 38.41 | -0.78% | 5.15% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 32.39 | 30.59 | -5.56% | -9.90% |
| 15 | Honda | HMC | NYSE | 5,990 | 29.46 | 29.41 | -0.17% | -7.89% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 55.43 | 49.77 | -10.21% | -27.66% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 68.19 | 65.70 | -3.65% | 31.45% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 38.53 | 37.75 | -2.02% | -11.49% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 82.09 | 79.27 | -3.44% | -5.90% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 42.96 | 41.68 | -2.98% | 3.30% |
| 21 | IBM | IBM | NYSE | 5,247 | 155.67 | 154.45 | -0.78% | 12.26% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 63.87 | 64.16 | 0.45% | -17.64% |
| 23 | Siemens | SIE | XETRA | 4,929 | 104.70 | 105.35 | 0.62% | 17.21% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 89.80 | 90.54 | 0.82% | -22.08% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 7.12 | 5.43 | -23.74% | -43.50% |
| Total | 175,313 | 1535.22 | 1512.20 | -1.50% | -0.62% |
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.
