The R&D Index: Market Watch for the week ending March 4, 2016, closed at 1,426.36 for the 25 companies in the R&D Index. The Index was up 2.58% (or nearly 36 basis points) over the week ending February 26, 2016. Only four of the 25 R&D Index companies (all pharmaceuticals) lost value for the week (Roche, -3.6%; Pfizer, -1.7%; Sanofi, -0.8% and Astra Zeneca, -1.7%). All three measured Index categories rose for the week—Biopharmaceutical by 0.4%, automotive by 5.9% and ICT by 3.7%.
This marks the third consecutive week that the R&D Index has risen for a total gain of 6.8% (more than 90 basis points). Analysts also noted that non-farm payrolls rose by 242,000 in February (along with 30,000 upward revisions for earlier months) and the U.S. unemployment rate held steady at 4.9%, while labor softness was seen with American wages declining slightly (0.1%) from those seen in January and the average workweek also declining in February from January levels. The overall weak wage performance gave analysts credence that the Federal Reserve Bank will not raise its short-term interest rates at its March 15-16 meeting, although continued job gains may improve the case for raising the rates in April.
The week-long rally last week was fueled by mostly positive global indicators revealing that “the real world was not as bad as the stock market made it out to be” during the oil price-driven decline seen in February and the China manufacturing decline seen in earlier months. Fears about a possible U.S. recession in 2016 appear to have vanished with the strong stock showing and other positive news throughout the week. Both the oil price decline/global glut and China’s manufacturing decline are still troublesome issues, but they don’t appear to be as crucial as they once were for driving down stock prices.
Markets in Japan (Nikkei), Hong Kong (Hang Seng), South Korea (Kospi), Shanghai (Composite) and Australia (S&P ASX 200) were similarly up for the week. Another indicator fueling the stock gains was the increasing price of oil (for the third consecutive week) which rose to $34.40/barrel on Friday, its highest price since early January. And North American shale oil producers also noted that they were starting to reduce their production levels due to the current low pricing of oil and the long-term outlook for continued price depression. OPEC’s continued production increases appear to have worked to reduce their competition from the shale oil producers.
The improving stability in the energy sector bodes well for improving energy-based R&D investments as well for 2016 especially from the dire indicators seen just a few weeks ago. Analysts also noted that there are bargains to be had in some sectors, such as biotech, where valuations declined from August to January and are now considered attractive to investors while still having a better financial status than seen in previous biotech downturns.
| Ticker | Exchange | 2014 R&D billions$ | 2/26/16 | 3/4/16 | 3/4/16 to 2/26/16 | 3/4/16 since 1/1/15 | ||
| 1 | Microsoft | MSFT | NASDAQ | 11,743 | 51.30 | 52.03 | 1.42% | 11.27% |
| 2 | Intel | INTC | NASDAQ | 11,537 | 29.80 | 30.63 | 2.79% | -15.60% |
| 3 | Roche Holdings | RHHBY | OTC | 9,961 | 32.66 | 31.49 | -3.58% | -7.36% |
| 4 | Novartis | NVS | NYSE | 9,086 | 72.03 | 72.20 | 0.24% | -22.08% |
| 5 | Johnson & Johnson | JNJ | NYSE | 8,672 | 105.78 | 106.48 | 0.66% | 1.83% |
| 6 | Pfizer | PFE | NYSE | 8,393 | 30.22 | 29.70 | -1.72% | -4.65% |
| 7 | Toyota | TM | NYSE | 8,141 | 105.14 | 109.55 | 4.19% | -12.70% |
| 8 | General Motors | GM | NYSE | 7,400 | 29.62 | 31.38 | 5.94% | -10.11% |
| 9 | Merck & Co. | MRK | NYSE | 7,180 | 50.64 | 52.06 | 2.80% | -8.33% |
| 10 | Ford Motor | F | NYSE | 6,900 | 12.46 | 13.59 | 9.07% | -12.32% |
| 11 | Cisco | CSCO | NASDAQ | 6,375 | 26.41 | 26.80 | 1.48% | -3.67% |
| 12 | Apple | AAPL | NASDAQ | 6,295 | 96.91 | 103.01 | 6.29% | -6.68% |
| 13 | Sanofi SA | SNY | NYSE | 5,838 | 40.15 | 39.81 | -0.85% | -14.09% |
| 14 | Qualcomm | QCOM | NASDAQ | 5,825 | 51.62 | 52.66 | 2.01% | -29.15% |
| 15 | IBM | IBM | NYSE | 5,595 | 132.00 | 137.77 | 4.37% | -13.92% |
| 16 | Astra Zeneca PLC | AZN | NYSE | 5,579 | 29.37 | 28.87 | -1.70% | -17.96% |
| 17 | Honda | HMC | NYSE | 5,571 | 26.08 | 28.03 | 7.48% | 5.30% |
| 18 | Daimler | DDAIY | OTC | 5,484 | 62.65 | 67.30 | 7.42% | -20.68% |
| 19 | Oracle | ORCL | NYSE | 5,466 | 36.96 | 37.89 | 2.52% | -15.74% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,374 | 39.14 | 39.14 | 0.00% | -8.42% |
| 21 | Siemens | SIE | XETRA | 5,195 | 86.31 | 89.84 | 4.09% | -4.17% |
| 22 | Eli Lilly Co | LLY | NYSE | 4,934 | 73.60 | 73.60 | 0.00% | 6.68% |
| 23 | Ericsson | ERIC | NASDAQ | 4,640 | 9.20 | 9.33 | 1.41% | -22.89% |
| 24 | Bristol-Myers Squibb | BMY | NYSE | 4,534 | 62.65 | 64.71 | 3.29% | 9.62% |
| 25 | Bayer AG | BAYN | XETRA | 4,325 | 97.83 | 98.49 | 0.67% | -12.84% |
| Total | 193,474 | 1390.53 | 1426.36 | 2.58% | -9.79% |
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 R&D. 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 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.
About the Author:
Tim Studt has served in a variety of senior editorial positions at Advantage Business Media (ABM) for the past 27 years, most recently as Editor-in-Chief of ABM’s R&D Magazine and Laboratory Design Newsletter and the R&D 100s Awards Program. He is currently working on the 2015 Global R&D Funding Forecast. R&D Index: Market Pulse is a new, regular column for the R&D Daily eNewsletter and will appear every Monday.
