The R&D Index for the week ending February 9, 2018 closed at 3,24.60 for the 25 companies in the R&D Index. The Index was down 5.50 percent (or 228.35 basis points) from the week ending February 2, 2018. Only one R&D Index company posted a gain for the week: General Motors (1.12%). Twenty-four R&D Index companies posted losses for the week from -0.03 percent (Toyota) to -9.81 percent (Sanofi SA).
Volatility became the watchword for last week’s stock market with most days seeing wild swings in the DJIA index both positive and negative. Net DJIA losses of -4.6 percent, -0.1 percent and -4.1 percent were seen on Monday, Wednesday and Thursday with net increases of 2.3 percent and 1.4 percent on Tuesday and Friday for a net full week loss of -5.2 percent. Most traders could not explain reasons for the wild daily swings, other than the over-riding fears of inflation driven by rising wages and raw materials costs. Bond rate changes even followed and then went against traditional trends during these volatile trading sessions and thus could not be attributed as a causal effect for the stock volatility.
Last week’s stock losses were classified as a “correction” when the DJIA dropped more than 10 percent on Thursday to the stock market rises seen since the November 2016 general elections. R&D investments are not currently affected by stock volatility due to the short time period. The recent revision to the tax codes passed by Congress are actually expected to increase R&D spending as companies look for areas to invest their previously unplanned revenues.
R&D Index members GM and Toyota reported their 4th quarter U.S. operating profits last week. GM’s rose to $2.9 billion (a record for the period), while Toyota’s declined by 73 percent from a year ago to $247 million. Toyota’s global operating profit rose 54 percent to $6.2 billion (its best in two years), while GM’s global profit rose 19 percent to $3.1 billion. The differences between the two companies in the U.S. lies in their product distribution: GM focuses its line-up on booming SUVs and pick-up trucks, while Toyota continues to heavily market its small sedan products, which are declining in market appeal. GM was the only R&D Index company to actually increase its stock value last week. Toyota sold about 17 million vehicles in 2017, while GM sold about 10 million. Toyota invests about 23 percent more in R&D ($9.2 billion) than GM ($7.5 billion) with both companies expected to increase their R&D spending in 2018 by about 3.5 percent.
R&D Index Week Ending February 9, 2018
| Ticker | Exchange | 2017 R&D billions$ | 02/02/18 | 02/09/18 | 2/9/18 to 2/2/18 | 2/9/18 to 1/1/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 17,774 | 1,429.95 | 1,339.60 | -6.32% | 78.64% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 15,845 | 1,119.20 | 1,046.27 | -6.52% | 32.03% |
| 3 | Microsoft | MSFT | NASDAQ | 13,987 | 91.78 | 88.18 | -3.92% | 41.91% |
| 4 | Intel | INTC | NASDAQ | 13,499 | 46.15 | 43.95 | -4.77% | 21.17% |
| 5 | Apple | AAPL | NASDAQ | 11,506 | 160.50 | 156.41 | -2.55% | 35.05% |
| 6 | Volkswagen AG | VLKAY | OTC | 11,260 | 43.10 | 41.44 | -3.85% | 44.49% |
| 7 | Roche Pharm | RHHBY | OTC | 10,174 | 30.00 | 28.98 | -3.40% | -2.69% |
| 8 | Toyota | TM | NYSE | 9,170 | 136.62 | 136.57 | -0.03% | 16.53% |
| 9 | Johnson & Johnson | JNJ | NYSE | 9,060 | 137.68 | 129.53 | -5.92% | 12.43% |
| 10 | Novartis | NVS | NYSE | 7,870 | 88.39 | 83.25 | -5.82% | 14.29% |
| 11 | General Motors | GM | NYSE | 7,468 | 41.00 | 41.46 | 1.12% | 19.00% |
| 12 | Pfizer | PFE | NYSE | 7,288 | 36.61 | 34.16 | -6.69% | 5.17% |
| 13 | Bristol-Myers Squibb | BMY | NYSE | 6,942 | 63.48 | 62.80 | -1.07% | 7.46% |
| 14 | Cisco | CSCO | NASDAQ | 6,827 | 40.93 | 39.53 | -3.42% | 30.81% |
| 15 | Qualcomm | QCOM | NASDAQ | 6,723 | 66.07 | 63.99 | -3.15% | -1.86% |
| 16 | Oracle | ORCL | NYSE | 6,702 | 50.13 | 47.73 | -4.79% | 24.14% |
| 17 | Honda | HMC | NYSE | 6,519 | 36.16 | 34.61 | -4.29% | 18.57% |
| 18 | Astra Zeneca PLC | AZN | NYSE | 6,363 | 35.90 | 33.61 | -6.38% | 23.02% |
| 19 | Merck & Co. | MRK | NYSE | 5,759 | 58.56 | 54.87 | -6.30% | -6.79% |
| 20 | Daimler | DDAIY | OTC | 5,084 | 88.62 | 86.55 | -2.34% | 22.38% |
| 21 | Bayer AG | BAYN | XETRA | 4,880 | 31.59 | 29.90 | -5.35% | 10.62% |
| 22 | Sanofi SA | SNY | NYSE | 4,755 | 43.22 | 38.98 | -9.81% | -3.75% |
| 23 | IBM | IBM | NYSE | 4,628 | 159.03 | 149.51 | -5.99% | -9.93% |
| 24 | GlaxoSmithKline | GSK | NYSE | 4,508 | 37.10 | 36.49 | -1.64% | -5.25% |
| 25 | Eli Lilly Co | LLY | NYSE | 4,489 | 81.18 | 76.23 | -6.10% | 3.64% |
| Total | 209,080 | 4,152.95 | 3,924.60 | -5.50% | 31.59% | |||
| Biopharmaceutical | 643.71 | 608.80 | -5.42% | 5.98% | ||||
| Automotive | 345.50 | 340.63 | -1.41% | 21.38% | ||||
| ICT | 1,733.79 | 1,635.57 | -5.67% | 25.18% | ||||
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 2017 were selected based on the latest listings from Schonfeld & Associates’ June 2017 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT (8) and conglomerate (1) organizations who invested a cumulative total of more than $209 billion in R&D in 2017, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2017 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 Amazon, Alphabet/Google, Microsoft, Intel, Apple, Volkswagen AG, Roche Pharma, Toyota, Johnson & Johnson, Novartis, General Motors, Pfizer, Bristol-Myers Squibb, Cisco, Qualcomm, Oracle, Honda Motor Company, Astra Zeneca plc, Merck & Company, Daimler, Bayer AG, Sanofi SA, IBM, GlaxoSmithKline and Eli Lilly Co. 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 $4.5 and $17 billion annually on their R&D efforts.
