Key Highlights

● AppLovin rallied while the ad-tech group split three ways: Digital Turbine edged higher and The Trade Desk lagged.

● Softer September jobs data lowered the odds of another Fed rate hike, lifting growth names broadly.

● Communication services was the S&P 500's second-best sector, led by Meta Platforms.

AppLovin climbed sharply on Monday, Oct. 5, leading a divided group of advertising-technology stocks as softer jobs data revived appetite for growth shares.

Out in front

AppLovin (NASDAQ:APP) rallied on Monday, finishing as one of the stronger growth names in the S&P 500. The ad-tech group split three ways: AppLovin rallied, Digital Turbine (NASDAQ:APPS) edged higher to about $11.35, and The Trade Desk (NASDAQ:TTD) lagged behind.

AppLovin's gain came without a specific company announcement. It was grouped with a set of growth names that jumped as softer jobs data lowered the odds of another interest-rate hike, alongside Sprout Social (NASDAQ:SPT), Tenable (NASDAQ:TENB), Toast (NYSE:TOST) and Braze (NASDAQ:BRZE).

Why rates matter for growth stocks

Friday's jobs report showed only 29,000 positions added in September, far below forecasts. That cut the odds of a Fed hike in October to roughly one in four or less, down from better than even a week earlier.

For fast-growing companies, much of their value rests on profits expected years from now, so the Interest Rate used to discount those future Earnings matters a great deal.

Daniela Hathorn of Capital.com described the same dynamic: "growth stocks are rallying because Fed expectations have softened, while the Risk-Free Rate against which those valuations are judged remains exceptionally high."

What AppLovin does

AppLovin runs a software platform that helps mobile app and game developers acquire users and earn money from advertising. Its AI-driven ad engine matches ads to users across a vast network of apps, and the company has been expanding the platform toward E-commerce advertisers. That has made it one of the most closely watched names in digital advertising.

Its gain fit a broadly positive day for media and Advertising stocks. Communication services was the top sector at midday, led by Meta Platforms (NASDAQ:META), and it ended as the S&P 500's second-best sector.

Records for tech, high yields

The broader market finished higher. The Nasdaq Composite rose 286.45 points to a record close of 27,477.31, and the Nasdaq-100 set a record at 31,076.44. The S&P 500 gained 51.23 points to 7,773.95, just shy of its summer record, and the Dow Jones Industrial Average added 90.94 points to 51,267.90.

That came despite pressure from bonds. The 10-year Treasury Yield rose to its highest close since 2002, and the ISM services survey showed prices paid at their highest since July 2022, keeping Inflation worries alive.

Mega-cap AI stocks did much of the heavy lifting. Nvidia (NASDAQ:NVDA) closed at a record with a Market Value of about $5.7 trillion, and Microsoft (NASDAQ:MSFT) climbed after Melius Research upgraded it to Buy.

Oil eased, with Brent settling at $100.32 a barrel and US crude near $89.43, after G7 nations agreed to release 100 million barrels of crude and diesel from emergency reserves. B. Riley Wealth's Art Hogan said: "With the economic data calendar being light and earnings about a week away, investors are really groping for anything positive to glom onto, and clearly they're looking at lower energy prices."

What to watch

For AppLovin, the next big checkpoint is its quarterly earnings report, where investors will look for updates on advertising Demand and progress with e-commerce advertisers.

Rate expectations will also matter for growth stocks. The Fed releases minutes of its September meeting on Wednesday, Oct. 7, at 2 p.m. ET, and the Fed's next policy meeting is Oct. 27–28. PepsiCo reports Thursday, Delta Air Lines Friday, and bank earnings begin on Oct. 13.