The R&D Index: Market Watch for the week ending February 17, 2017 closed at 1,619.77 for the 25 companies in the R&D Index. The Index was up 2.14% (or 33.94 basis points) over the week ending February 10, 2017. Twenty-four R&D Index companies gained value last week from 0.13% (Honda) to 7.08% (Cisco). Only one of the 25 R&D Index companies lost value last week -1.25% (Astra Zeneca).
Several economic announcements last week point to another Federal Reserve interest rate hike soon, possibly as early as their next meeting on March 14-15, 2017. The next opportunity for a rate increase is May 2-3, 2017, which may be too late for enacting the first of three proposed rate increases in 2017. On Wednesday, the Commerce Dept. reported stronger than expected retail sales growth in January, while the Federal Reserve reported factory output increased in January as well. The Labor Dept. also reported last week that U.S. inflation in January rose to its highest level in nearly five years, increasing 0.6% following a 0.2% increase in December 2016. The measure is up 1.6% from a year earlier. Half of the increase in January was due to a 12.9% rise in gasoline prices. The strong growth in stock prices seen last week were primarily due to these factors presenting a picture of confidence in continued overall U.S. economic growth.
The current Fed interest rate is 0.75% with two 0.25% increases on December 14, 2016 and December 17, 2015 following more than six years on no increases and interest rates frozen at 0.25% (effectively zero). The Fed states that it likes to keep the federal funds rate between 2-5%, which fosters annual GDP growth between 2-3%.
R&D Index member General Motors last week announced that it was abandoning its long-standing global strategy by considering the sale of its weakening Opel AG unit to French car maker Peugeot. Opel has yet to post a profit in this century. According to analysts, the sale would free up money to focus on more profitable markets and support its R&D efforts on future technologies, such as self-driving and fully electric cars and trucks. GM and Peugeot formed an alliance in 2012 to co-develop vehicle platforms and purchase vehicle components.
R&D Index member Apple closed Friday at a record 135.72, putting its total market value at more than $700 billion, about $120 billion ahead of the second largest global company, Google parent Alphabet and beyond the values of Exxon Mobil and J.P Morgan Chase combined. Nearly two-thirds of Apple’s sales and three-quarters of its operating profit are related to Apple’s iPhone businesses, which is troubling to some analysts for continuing growth.
| R&D Index Week Ending February 17, 2017 |
| Ticker | Exchange | 2015 R&D billions$ | 02/10/17 | 02/17/17 | 2/17/17 to 2/10/17 | 2/17/17 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 64.00 | 64.62 | 0.97% | 16.47% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 35.34 | 36.48 | 3.23% | 5.89% |
| 3 | Roche Pharm | RHHBY | OTC | 10,242 | 30.00 | 30.53 | 1.77% | -11.43% |
| 4 | Toyota | TM | NYSE | 9,112 | 112.89 | 113.70 | 0.72% | -7.59% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 115.24 | 118.86 | 3.14% | 15.71% |
| 6 | Novartis | NVS | NYSE | 8,935 | 75.21 | 77.20 | 2.65% | -10.32% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 132.12 | 135.72 | 2.72% | 28.94% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 32.35 | 33.62 | 3.93% | 3.80% |
| 9 | General Motors | GM | NYSE | 7,500 | 35.17 | 37.22 | 5.83% | 9.44% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 64.15 | 65.39 | 1.93% | 23.80% |
| 11 | Ford Motor | F | NYSE | 6,700 | 12.51 | 12.58 | 0.56% | -10.72% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 31.51 | 33.74 | 7.08% | 24.23% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 40.79 | 42.06 | 3.11% | 15.14% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 29.53 | 29.16 | -1.25% | -14.11% |
| 15 | Honda | HMC | NYSE | 5,990 | 31.57 | 31.61 | 0.13% | -1.00% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 51.65 | 54.59 | 5.69% | -20.65% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 54.00 | 56.46 | 4.56% | 12.97% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 42.57 | 43.16 | 1.38% | 1.20% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 77.79 | 80.39 | 3.34% | -4.57% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 40.28 | 41.34 | 2.63% | 2.45% |
| 21 | IBM | IBM | NYSE | 5,247 | 178.68 | 180.67 | 1.11% | 31.32% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 67.12 | 67.61 | 0.73% | -13.21% |
| 23 | Siemens | SIE | XETRA | 4,929 | 119.65 | 120.60 | 0.79% | 34.18% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 106.00 | 106.50 | 0.47% | -8.35% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 5.71 | 5.96 | 4.38% | -37.98% |
| Total | 175,313 | 1585.83 | 1619.77 | 2.14% | 6.45% | |||
| Biopharmaceutical | 664.77 | 680.74 | 2.40% | -2.01% | ||||
| Automotive | 259.26 | 262.72 | 1.33% | -6.50% | ||||
| ICT | 536.44 | 549.75 | 2.48% |
23.14% |
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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.
