The R&D Index: Market Watch for the week ending July 29, 2016 closed at 1,550.74 for the 25 companies in the R&D Index. The Index was up 1.25 percent (or 19.2 basis points) over the week ending July 22, 2016, or a gain of 9.5 percent over the past five weeks. Seventeen of the 25 R&D Index companies saw gains from Microsoft (0.2 percent) to Astra Zeneca (9.7 percent). Eight stocks had losses for the week from Oracle (-0.1 percent) to Ford Motor (-8.5 percent). For the fourth consecutive week the average for all three R&D Index categories rose in value last week
While the past several weeks have shown strong growth in stock valuations, the overall U.S. economy is declining. According to a report released Friday by the Dept. of Commerce, U.S. GDP grew at a seasonally and inflation-adjusted rate of just 1.2 percent in the second quarter, well below expectations and the weakest start to a year since 2011. This data contrasts with other data, such as 4.9 percent unemployment, increasing wages, post-recession record high home sales, and an increase of 4.2 percent in consumer spending in the second quarter—the highest in two years. On the other side of the economic coin, business investment declined for the third consecutive quarter in the second quarter, inventories declined in the second quarter and government spending continues to decline (in line with budget projections). In general, the decline in business investments includes a decline in R&D investments. Historically, industrial R&D investments have shown strong links to overall GDP growth.
The weak economic data released last week, was reaffirmed when the Federal Reserve stated it would not raise short-term interest rates last Wednesday at its regularly scheduled July meeting. Its release, however, stated that it would still like to have a rate increase this year, possibly as early as September. As opposed to previous stock perturbations, last week’s Fed rate decision had no effect on stock sales.
Oil supplies continued to increase last week, pushing prices down to about $42/barrel, down from about $51/barrel in early June. Inventories are more than 10 percent higher than they were a year ago. And while U.S. and Canadian oil-sand production has declined, foreign production has increased. Most analysts are unconcerned about the current situation and don’t see any major changes in the short-term, either in demand or in supply.
There was a bit of news concerning Apple last week. First, its second-quarter quarterly profit fell 27 percent–the second consecutive quarter—but this beat analysts’ expectations and Apple stock rose 6 percent. There also were some administrative reassignments for Apple’s secret autonomous, electric-vehicle initiative (Project Titan), which has several hundred people are working on.
| Ticker | Exchange | 2015 R&D billions$ | 07/22/16 | 07/29/16 | 7/29/16 to 7/22/16 | 7/29/16 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 56.57 | 56.68 | 0.19% | 2.16% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 34.66 | 34.86 | 0.58% | 1.19% |
| 3 | Roche Holdings | RHHBY | OTC | 10,242 | 31.69 | 32.09 | 1.26% | -6.90% |
| 4 | Toyota | TM | NYSE | 9,112 | 109.68 | 111.60 | 1.75% | -9.30% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 125.03 | 125.23 | 0.16% | 21.91% |
| 6 | Novartis | NVS | NYSE | 8,935 | 83.51 | 83.26 | -0.30% | -3.28% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 98.66 | 104.21 | 5.63% | -1.00% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 36.74 | 36.89 | 0.41% | 13.89% |
| 9 | General Motors | GM | NYSE | 7,500 | 32.16 | 31.54 | -1.93% | -7.26% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 58.82 | 58.66 | -0.27% | 11.06% |
| 11 | Ford Motor | F | NYSE | 6,700 | 13.84 | 12.66 | -8.53% | -10.15% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 30.71 | 30.53 | -0.59% | 12.41% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 41.08 | 41.04 | -0.10% | 12.35% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 31.13 | 34.14 | 9.67% | 0.56% |
| 15 | Honda | HMC | NYSE | 5,990 | 26.82 | 27.12 | 1.12% | -15.06% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 75.68 | 74.81 | -1.15% | 8.74% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 61.15 | 62.58 | 2.34% | 25.21% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 42.31 | 42.63 | 0.76% | -0.05% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 81.59 | 82.89 | 1.59% | -1.60% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 43.88 | 45.07 | 2.71% | 11.70% |
| 21 | IBM | IBM | NYSE | 5,247 | 162.07 | 160.62 | -0.89% | 16.75% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 59.51 | 60.82 | 2.20% | -21.93% |
| 23 | Siemens | SIE | XETRA | 4,929 | 94.82 | 97.12 | 2.43% | 8.06% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 92.07 | 96.22 | 4.51% | -17.19% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 7.36 | 7.47 | 1.49% | -22.27% |
| Total | 175,313 | 1531.54 | 1550.74 | 1.25% | 1.92% | |||
| Biopharmaceutical | 702.45 | 711.89 | 1.34% | 2.48% | ||||
| Automotive | 242.01 | 243.74 | 0.71% | -13.25% | ||||
| ICT | 484.90 | 490.52 | 1.16% | 9.87% | ||||
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.
