Key Highlights

● Meta led communication services, the best-performing S&P 500 sector at midday, with no company-specific news.

● Reuters put the stock at about $741.90 by the close, with communication services finishing second-best behind materials.

● Not every mega-cap joined in: Amazon and Alphabet were little changed the same day.

Meta Platforms climbed on Monday, Oct. 5, leading communication services to the top of the sector leaderboard at midday as mega-cap tech carried the Nasdaq-100 to a record.

Leading the pack

Meta Platforms (NASDAQ:META) climbed on the Nasdaq-100 on Monday and led communication services, which was the best-performing sector in the S&P 500 at midday. No company-specific news was found to explain the move.

By the close, communication services finished as the second-best sector, behind only materials. Reuters put Meta at about $741.90 at the end of the day.

Meta, which owns Facebook, Instagram and WhatsApp, has been one of the biggest spenders on AI infrastructure. On Monday, investors were happy to buy into that theme.

Mega-cap AI does the lifting

Meta's gain was part of a broader rush into the largest tech names. Nvidia (NASDAQ:NVDA) rose to a record close and a Market Value of about $5.7 trillion. Microsoft (NASDAQ:MSFT) rose after Melius Research upgraded it to Buy from Hold with a $665 target, calling it "the adult in charge" on AI security and governance. Broadcom (NASDAQ:AVGO) also climbed.

That Leadership pushed the Nasdaq-100 to a record 31,076.44, and the Nasdaq Composite jumped 286.45 points to a record 27,477.31. The S&P 500 added 51.23 points to 7,773.95, just shy of its summer record. The Dow rose 90.94 points to 51,267.90.

Not every mega-cap joined in. Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) were little changed.

Softer Fed bets, higher yields

The backdrop for tech was mixed. Friday's September jobs report showed payrolls rising by just 29,000, which cut bets on an October Federal Reserve rate hike to roughly one in four or less.

But the 10-year Treasury Yield still climbed to its highest level since 2002. The ISM services prices-paid index hit 74.0 on Monday, the highest since July 2022.

Daniela Hathorn, senior market analyst at Capital.com, said: "growth stocks are rallying because Fed expectations have softened, while the Risk-Free Rate against which those valuations are judged remains exceptionally high."

Expectations for AI-driven profits remain high. Analysts expect third-quarter S&P 500 Earnings growth to be strong, largely driven by AI stocks.

Robert R. Pires, chief Investment officer at BIAS Investors, said: "Commentary on energy prices, inflation, hiring plans, and the adoption of artificial intelligence should also give a clearer picture of where the economy is headed."

The rest of the day

Elsewhere, Brazilian stocks soared after Senator Flávio Bolsonaro edged ahead of President Lula in the first round of the presidential election, setting up an Oct. 25 runoff. Oil fell, with Brent settling at $100.32 a barrel, even as the Strait of Hormuz stayed effectively closed. Health care was among the weakest sectors.

The VIX, Wall Street's fear gauge, rose to 15.52, a reminder that some investors were still hedging against a bumpy ride.

Sentiment improved but stayed cautious. The CNN Fear and Greed index rose to 43 from 31, still in "Fear" territory.

Meta's climb showed that investors were still willing to reward big AI spenders, at least for now.

What to watch

Minutes from the Fed's September meeting are due Wednesday, Oct. 7 at 2 p.m. ET, and the Fed meets again Oct. 27 to 28. Earnings season begins with PepsiCo on Thursday and Delta Air Lines on Friday, followed by the big banks from Oct. 13.

For Meta, the next big catalyst is the company's next quarterly report, where AI spending and Advertising trends will be in focus.