Market Watch for the week ending May 5, 2017 closed at 1,662.83 for the 25 companies in the R&D Index. The Index was up 1.97% (or 32.07 basis points) over the week ending April 28, 2017. Only five R&D Index companies lost value last week from -1.30% (Pfizer) to -3.27% (IBM). Twenty R&D Index companies gained value last week, from 0.03% (Johnson & Johnson) to 4.65% (Roche Pharm).
One of the big highlights of last week’s news was the Dept. of Labor’s jobs report on Friday which stated that 211,000 jobs were added in April following just 79,000 jobs being added in March. Even more encouraging was their statement that the unemployment rate dropped 0.1% to a seasonally adjusted 4.4%, the lowest level since the 2001 recession—more than 15 years ago. So far in 2017, the U.S. economy has added an average of 185,000 jobs/month, roughly equally the pace of 2016, but still below that of 2015 and 2014. U.S. GDP growth for 1Q 2017 came in at just 0.7%, but is now projected to be at 4.0% for the 2Q 2017, according to analysts. The low unemployment rate is also putting pressure on those companies having problems finding skilled workers and it’s likely that salaries for those workers will rise over the rest of the year.
Noting the U.S. economy’s continued growth, the Federal Reserve commented, at its regular meeting last Wednesday, that its interest rate plans remain in place. No additional rate increases were announced at the Wednesday meeting—the next regular meeting is scheduled for June 13-14 at which time a rate increase is likely to be announced so they keep to their previously announced schedule of three to four rate increases by the end of 2017.
Following lengthy negotiations since February 2016, China National Chemical Co.’s proposed $43 billion acquisition of Swiss agro-giant Syngenta AG was approved last week by the Swiss company’s shareholders. Analysts note that ChemChina may have problems in expanding Syngenta’s seed and pesticide businesses in China’s fragmented and inefficient agro sector once the deal closes later this year. ChemChina also will need to find new investors to finance the hefty price tag for Syngenta.
Automakers noted that their sales have dropped about 4.7% in April from April 2016, including the normally hot selling SUV and truck sectors. GM sales dropped 5.8%, Ford dropped 7.1%, Toyota dropped 4.4%, Fiat Chrysler (FCA) dropped 7.0%, Honda dropped 7.0% and Nissan dropped 1.5%. The automakers plan to offer deep discounts, and rely on low gas prices and the U.S.’s broad economic strength to regain some of the lost sales during its traditionally strong summer sales season.
|R&D Index Week Ending May 5, 2017|
|Ticker||Exchange||2015 R&D billions$||04/28/17||05/05/17||5/5/17 to 4/28/17||5/5/17 to 1/1/16|
|Johnson & Johnson||JNJ||NYSE||9,046||123.47||123.51||0.03%||20.24%|
|Merck & Co.||MRK||NYSE||6,704||62.33||63.97||2.63%||21.11%|
|Astra Zeneca PLC||AZN||NYSE||5,997||30.25||30.46||0.69%||-10.28%|
|Eli Lilly Co||LLY||NYSE||5,331||82.06||82.51||0.55%||-2.05%|
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.