R&D Market Pulse: US Stock Indices on Track for Worst Month in Eight Years – R & D Magazine

The R&D Index for the week ending October 26, 2018 closed at 4,285.28 for the 25 companies in the R&D Index. The Index was down -4.03% (or -180.11 basis points) from the week ending October 19, 2018. The stock of three R&D Index companies gained value last week from 0.84% (Toyota) to 4.65% (General Motors). The stock of twenty-two R&D Index companies lost value last week from -0.64% (Daimler) to -15.57% (Bayer AG).

Concerns that U.S. (and most global) economic growth factors have peaked concerned investors last week with a broad sell-off, especially in many technology stocks. For the week, biopharma stocks in the R&D Index fell 3.9% while ICT stocks fell 1.9%. The automotive sector of the R&D Index was mostly unchanged, being up only 0.4%. So far, the October sell-offs put all U.S. stock indices on track for their worst month in more than eight years. Driving these actions, analysts expect the U.S. economy to slow from the strong 3.5% growth seen in 3Q 2018 to 2.5% in 2019 (Federal Reserve projection), 2.0% in 2020 and 1.8% in 2021. Despite the large tax cuts made at the beginning of 2018, the outlook for future trade tariffs are also creating a volatile environment for business investors. The stock drops seen in October are also likely to reduce spending despite the gains made earlier in the year.

Two R&D Index companies—GM and Honda—last week called for increased electric vehicle incentives. GM asked the federal government to create a nationwide electric car program, while Honda called for continuing the government’s previously steadily increasing mileage requirements, rather than backing off on the regulations which has been proposed over the past several weeks.

Boeing has won three defense contracts over the past several months—in August they beat out Lockheed Martin for the MQ-29A unmanned carrier-based tanker worth up to $13 billion, in September they beat out Lockheed Sikorsky for replacement of Huey helicopters for $2.4 billion and also in September they were awarded the USAF’s next-generation T-X trainer contract for $9 billion, beating out Lockheed Korea. The TX and MQ-29A contracts were awarded in part due Boeing’s R&D investments before the contracts were awarded in building prototypes and performing engine and flight testing. By doing this they were able to propose lower production pricing and thereby win the contracts.

      R&D Index Week Ending October 26, 2018      
    Ticker Exchange 2018 R&D millions U.S. $ 10/19/18 10/26/18 10/26/18 to 10/19/18 10/26/18 to 12/29/17
1 Amazon AMZN NASDAQ 26,750 1,764.03 1,642.81 -6.87% 40.47%
2 Alphabet/Google GOOGL NASDAQ 18,796 1,105.18 1,083.75 -1.94% 2.88%
3 Apple AAPL NASDAQ 14,037 219.31 216.30 -1.37% 27.81%
4 Intel INTC NASDAQ 13,702 44.00 45.69 3.84% -1.02%
5 Microsoft MSFT NASDAQ 13,558 108.66 106.96 -1.56% 25.04%
6 Roche Pharm RHHBY OTC 12,284 30.60 29.32 -4.18% -7.16%
7 Johnson & Johnson JNJ NYSE 11,493 139.05 136.97 -1.50% -1.97%
8 Merck & Co. MRK NYSE 11,323 72.35 70.40 -2.70% 25.11%
9 Volkswagen AG VWAGY OTC 10,915 15.96 15.28 -4.26% -62.22%
10 Toyota TM NYSE 10,848 116.32 117.30 0.84% -7.76%
11 Novartis NVS NYSE 8,934 87.19 85.29 -2.18% 1.58%
12 Honda HMC NYSE 8,180 27.17 26.75 -1.55% -21.51%
13 Pfizer PFE NYSE 7,942 44.50 42.60 -4.27% 17.61%
14 Daimler DDAIY OTC 7,615 59.13 58.75 -0.64% -30.52%
15 General Motors GM NYSE 7,278 31.20 32.65 4.65% -20.35%
16 Oracle ORCL NYSE 7,001 47.59 47.32 -0.57% 0.08%
17 Bristol-Myers Squibb BMY NYSE 6,981 54.30 50.43 -7.13% -17.71%
18 Eli Lilly Co LLY NYSE 6,769 111.92 106.39 -4.92% 25.96%
19 GlaxoSmithKline GSK NYSE 6,394 40.87 39.32 -3.79% 10.85%
20 Cisco CSCO NASDAQ 6,009 45.34 44.25 -2.40% 15.54%
21 IBM IBM NYSE 5,842 129.10 124.79 -3.34% -18.66%
22 Bayer AG BAYN OTC 5,743 22.48 18.98 -15.57% -38.95%
23 Astra Zeneca PLC AZN NYSE 5,483 39.21 37.90 -3.34% 9.22%
24 Qualcomm QCOM NASDAQ 5,183 65.36 62.48 -4.41% -2.41%
25 Sanofi SA SNY NYSE 4,694 44.57 42.60 -4.42% -0.93%
  Total     243,754 4,465.39 4,285.28 -4.03% 13.01%
                 
      Biopharmaceutical 687.04 660.20 -3.91% 3.52%
      Automotive 249.78 250.73 0.38% -23.38%
      ICT   1,764.54 1,731.54 -1.87% 4.48%

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 2018 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 2018 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.