First Look With Surveillance: US Jobs, Apple Sales
The chill that's settled in over Canada's largest housing market was on full display to start the year. The Toronto Regional Real Estate Board says home sales fell 45 per cent year-over-year in the month, dropping to the lowest levels since the early days of pandemic lockdowns back in April 2020. Prices didn't fare much better – the benchmark price in the region was down 14 per cent from a year earlier (not to mention down 0.2 per cent sequentially) to just shy of $1.08 million as the rising cost of borrowing and subsequent tougher mortgage stress tests weigh on activity. Now, all that being said, let's not call it a return to affordability in the Greater Toronto housing market – prices are still some 28 per cent above pre-pandemic levels, and remain clearly divorced from economic and wage fundamentals in the region.
CURB YOUR (MARKET) ENTHUSIASM
Looks like we're staring down a weak showing in the final trading session of the week, with North American equity market futures pointing to a negative open after yesterday's broadly positive showing. Blame it on the tech titans (more on that below) – with Nasdaq futures pointing to a more than one per cent drop at the open after yesterday's Meta-fueled 3.25 per cent gain. Quarterly results out of the final trio of FAANG stocks painted a somewhat grim view of consumer activity and sentiment to cap off the year, which seems to be pouring cold water on Thursday's rally. Worth watching back here at home if there's some sympathetic selling – Shopify was the most influential gainer on the TSX yesterday, adding nearly 38 points to the board, but that rally is in danger of fading if it follows the trend of tech stocks south of the border.
APPLE SUFFERS WORST HOLIDAY QUARTER IN FOUR YEARS
So, to expound on that point – Apple shares are slipping in the premarket (down nearly three per cent) after the company suffered its worst holiday quarter performance in four years. Pick your metric, and it's probably a disappointment – revenue fell 5.5 per cent to US$117.2 billion, missing estimates by a cool US$4 billion, the first time it's missed analyst expectations since 2015, with iPhone and Mac sales proving to be particular weak spots (the former remains a massive driver of Apple's overall revenue pie, thus the concerns.) If you're looking for a bright spot in all of this (as there aren't many), I should point out it was always going to be a tough comparison to the same quarter a year ago, given Apple launched a revamped MacBook Pro line last holiday season, which typically boosts sales.
SLOWER AD DEMAND HITS ALPHABET
Sticking with that tech theme, shares of Google, who’s parent company is Alphabet, are down the better part of four per cent after narrowly missing analyst expectations in its fourth quarter. The search-engine giant delivered somewhat lacklustre results in its core advertising business, with sales excluding partner payouts (ex-TAC revenue, for the acronym nerds out there), coming in at US$63.1 billion in the fourth quarter. It was more of the same over at Alphabet's YouTube division, where advertising revenue also fell short of expectations in the quarter.
SLOWING CLOUD-COMPUTING SALES WEIGH ON AMAZON
Well, let's make it a trifecta of tech disappointments to cap off the week. Finally, we've got Amazon – down four-and-a-half per cent in the premarket trading session – after the company spooked investors by reporting sales growth in its lucrative cloud-computing division is expected to continue to slow. Amazon Web Services posted sales of US$21.4 billion in the latest quarter, up 20 per cent – nothing to sneeze at, to be sure – but that marks the fourth-straight quarter of declining growth since AWS posted a 40 per cent increase in the final quarter of 2021. If we go back to the part of Amazon consumers are most familiar with, the goods-selling side of the business lost money for the fifth straight quarter, in spite of deep job cuts and the delay in opening new warehouses that began last year.
OTHER NOTABLE STORIES
- Oil prices are heading for their second consecutive weekly decline – down 4.4 per cent this week, at last check – amid rising U.S. stockpiles and some dimming sentiment over the recovery in Chinese demand.
- Shares of Nordstrom are soaring in the premarket – up nearly 30 per cent – after the Wall Street Journal reported meme-stock investor Ryan Cohen has built a sizeable stake in the company.
- Notable data: U.S. Employment Report, ISM Services PMI, TRREB to release January housing market statistics
- Notable events – Finance Minister Chrystia Freeland meets with provincial finance ministers in Toronto
- Notable earnings: Resolute Forest Products, Madison Square Garden Sports, News Corp