Key Highlights

● The Trade Desk lagged while AppLovin rallied and Digital Turbine edged higher.

● Growth and software names like Samsara and Guidewire Software rose on softer jobs data.

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

The Trade Desk lagged on Monday as advertising-technology stocks split three ways, with AppLovin rallying, Digital Turbine edging higher and The Trade Desk trailing behind.

Ad-tech splits three ways

The Trade Desk (NASDAQ:TTD) lagged on Monday, Oct. 5, trailing both its advertising-technology peers and a firm S&P 500. No company-specific news, announcement or filing was found to explain the move.

The ad-tech cluster split three ways during the session. AppLovin (NASDAQ:APP) rallied, Digital Turbine (NASDAQ:APPS) edged higher to around $11.35, and The Trade Desk lagged. In other words, investors were picking and choosing within the group rather than buying or selling it as a block.

What The Trade Desk does

The Trade Desk runs a software platform that advertisers and agencies use to buy digital ads across websites, apps, streaming television and audio. It sits on the buying side of the online Advertising market, helping brands decide where to place ads and how much to pay.

That makes the company sensitive to the health of advertising budgets, which in turn depend on how confident businesses feel about the economy. It also means it competes for attention with other ad-tech companies, which can lead to sharp differences in how individual stocks trade on any given day.

Growth stocks get a lift elsewhere

The Trade Desk's lag stood out because many growth and software stocks rose on Monday. Gains in names like Samsara (NYSE:IOT), Guidewire Software (NYSE:GWRE) and Zeta Global (NYSE:ZETA) were tied to softer jobs data, which reduced the odds of another Federal Reserve rate hike.

"When discount rates stabilize or decline, the present value of those future Earnings increases," one market commentary explained, describing why Growth Stocks tend to benefit when rate expectations ease.

Communication services, the sector that includes many advertising-driven companies, was the second-best performer in the S&P 500. Meta Platforms (NASDAQ:META) led the group at midday.

A record for the Nasdaq

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

Large technology and artificial-intelligence names led the charge. Nvidia (NASDAQ:NVDA) closed at a record, and Microsoft (NASDAQ:MSFT) rose after Melius Research upgraded it to Buy. Deal news helped too: Schneider Electric agreed to buy PTC (NASDAQ:PTC) for $205 a share in cash, which lifted other engineering-software names such as Bentley Systems (NASDAQ:BSY) and Autodesk (NASDAQ:ADSK).

The rally came despite rising long-term borrowing costs. The 10-year Treasury Yield climbed to its highest close since 2002, as Inflation worries lingered. The ISM services prices-paid index rose to its highest level since July 2022.

Friday's jobs report showed employers added only 29,000 jobs in September. Traders now see roughly a one-in-four or smaller chance of an October Fed hike, down from better than even a week ago.

"This will reinforce the impact of recent Fedspeak in calming expectations about an October rate hike," Mohamed El-Erian said after the jobs data.

What to watch

The Federal Reserve releases minutes from its September meeting on Wednesday, Oct. 7, at 2pm ET, and the Fed meets again on Oct. 27-28. Any shift in rate expectations could move growth stocks like The Trade Desk. Investors will also watch the company's next Quarterly Report for signs of how advertisers are spending. The third-quarter earnings season begins in earnest when big banks report from Oct. 13, offering a broader read on corporate confidence.