The R&D Market Pulse Index for the week ending May 19, 2017 closed at 1,636.22 for the 25 companies in the Index. The Index was down -0.34% (or -5.57 basis points) over the week ending May 12, 2017. Fifteen Index companies lost value last week from -0.07% (Novartis) to -6.70% (Cisco). Ten Index companies gained value last week, from 0.17% (Bayer AG) to 4.25% (Qualcomm).
Stocks had their worst day of the year on Wednesday with the DJIA falling 1.78%, the S&P 500 falling 1.82% and the Nasdaq composite falling 2.57%. The markets gained back about half of those losses on Thursday and Friday amid positive news released on the strongest growth in the European market in nearly 10 years. The Wednesday stock drop was mostly associated with investor anxiety over President Trump’s legislative agenda—including tax cuts, infrastructure spending and deregulation. The recent disclosures by fired FBI Director James Comey have stoked concerns by investors about the President’s future political stability and his economic growth plans.
The stock decline on Wednesday was preceded by a release on Tuesday by the Federal Reserve that industrial output increased by 1.0% in April, the largest single gain in more than three years. This report reaffirmed other indicators (unemployment and job gains) of the basic strength of the U.S. economy.
Index member Ford Motor also released news last week that it would reduce its salaried workforce in some areas by as much as 10%. This could amount to 1,400 job cuts in North America and Asia by September, according to analysts, and contribute to a $3 billion cost reduction for 2017. Ford was forecast to spend $7.6 billion on R&D in 2017, a 4.5% increase over the $7.2 billion the company spent on R&D in 2016. The 2017 R&D spending could also now be at risk, although much of it may be targeted at electric and autonomous vehicle development, which the company has made strong commitments to for release of new products over the next three years.
Following a decade of strong growth, U.S. automakers Ford, GM, and Fiat Chrysler are experiencing a softness in sales growth that may affect their early-2017 promises to the Trump administration to increase the number of U.S. jobs. Those earlier promises may now actually turn into job cuts due to weak sales.
Citing weak growth (20 consecutive quarters of falling revenue), R&D Index member IBM last week issued a notice to its employees that it is reversing its work-from-home policy. IBM told its work-from-home employees that they must return to a regional hub (office environment) or find another job. The new policy is targeted at improving employee collaboration and accelerating the pace of work.
| R&D Market Pulse Index Week Ending May 19, 2017 |
| Ticker | Exchange | 2015 R&D billions$ | 05/12/17 | 05/19/17 | 5/19/17 to 5/12/19 | 5/19/17 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 68.38 | 67.69 | -1.01% | 22.01% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 35.53 | 35.40 | -0.37% | 2.76% |
| 3 | Roche Pharm | RHHBY | OTC | 10,242 | 33.75 | 34.30 | 1.63% | -0.49% |
| 4 | Toyota | TM | NYSE | 9,112 | 106.46 | 107.56 | 1.03% | -12.58% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 123.64 | 127.00 | 2.72% | 23.64% |
| 6 | Novartis | NVS | NYSE | 8,935 | 80.48 | 80.42 | -0.07% | -6.58% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 156.10 | 152.96 | -2.01% | 45.32% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 33.01 | 32.46 | -1.67% | 0.22% |
| 9 | General Motors | GM | NYSE | 7,500 | 33.62 | 32.72 | -2.68% | -3.79% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 63.57 | 63.78 | 0.33% | 20.75% |
| 11 | Ford Motor | F | NYSE | 6,700 | 10.92 | 10.87 | -0.46% | -22.85% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 33.45 | 31.21 | -6.70% | 14.91% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 45.08 | 44.31 | -1.71% | 21.30% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 34.00 | 33.90 | -0.29% | -0.15% |
| 15 | Honda | HMC | NYSE | 5,990 | 28.12 | 27.68 | -1.56% | -13.31% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 55.03 | 54.02 | -1.84% | -21.48% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 55.32 | 57.67 | 4.25% | 15.39% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 49.21 | 49.31 | 0.20% | 15.62% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 80.19 | 77.80 | -2.98% | -7.64% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 43.26 | 43.60 | 0.79% | 8.05% |
| 21 | IBM | IBM | NYSE | 5,247 | 150.37 | 151.98 | 1.07% | 10.47% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 69.07 | 67.89 | -1.71% | -12.85% |
| 23 | Siemens | SIE | XETRA | 4,929 | 130.00 | 128.15 | -1.42% | 42.58% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 116.75 | 116.95 | 0.17% | 0.65% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 6.48 | 6.59 | 1.70% | -31.43% |
| Total | 175,313 | 1641.79 | 1636.22 | -0.34% | 7.54% | |||
| Biopharmaceutical | 712.89 | 713.54 | 0.09% | 2.71% | ||||
| Automotive | 248.19 | 246.72 | -0.59% | -12.19% | ||||
| ICT | 544.23 | 541.22 | -0.55% | 21.23% | ||||
About R&D Market Pulse
R&D Market Pulse 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 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.
