Meta Soars as Investors Click ‘Like’ on AI Advances

Key learning points

  • The S&P 500 rose 0.5% on Friday, June 5, 2024, after the latest jobs report showed signs of a cooling labor market, raising expectations for rate cuts.
  • Shares of Meta Platform rose after it emerged that parent company Facebook’s AI investments are starting to pay off.
  • Shares of Southwest Airlines plummeted. The company recently adopted a “poison pill” plan aimed at preventing an activist investor from acquiring more shares.

Major U.S. stock indexes rose at the end of the shortened trading week following Independence Day.

Friday’s gains followed the June jobs report, which showed a slowing pace of hiring and a rise in the unemployment rate, prompting expectations that the Federal Reserve could cut interest rates in the coming months.

The S&P 500 rose 0.5%, closing at an all-time high for the third session in a row. A 0.9% jump lifted the Nasdaq to a new record close. After trading in negative territory for much of the session, the Dow rose in the afternoon, closing 0.2% higher.

Shares of Facebook and Instagram parent Meta Platforms (META) rose 5.9% on Friday, marking the best performance in the S&P 500 and the stock’s highest closing price ever. The gains came amid optimism that Meta’s massive investments in artificial intelligence (AI) technology could start to trickle down to revenue growth, with analysts at Bernstein recently suggesting that AI-powered algorithms are increasing the time users spend in Meta’s apps.

Shares of Baxter International (BAX) rose 5.3% after reports that the healthcare technology company is negotiating a potential sale of its kidney care spinoff Vantive to private equity firm Carlyle Group (CG). Sources said the companies had entered exclusive talks over a deal valued at $4 billion, including debt.

Rising AI optimism helped lift shares of semiconductor maker Advanced Micro Devices (AMD), which rose 4.9%. AMD is poised to ramp up shipments of its latest generation of graphics processing units (GPUs) optimized for generative AI applications, and analysts expect new AI-related product launches in the second half of the year.

Shares of Southwest Airlines (LUV) fell 5.7%, marking the biggest loss of any S&P 500 component on Friday. The company earlier this week adopted a shareholder rights plan dubbed the “poison pill” intended to prevent activist investor Elliott Investment Management from acquiring more shares. The activist firm has called for a leadership change.

Shares of First Solar (FSLR) fell 3.9% to close out a volatile week of trading for the solar technology company. The stock fell Tuesday after analysts at Baird raised their price targets based on updated cost and price expectations, but then recovered sharply in Wednesday’s shortened session. First Solar has been highlighting the prospect of helping power demand from AI data centers, but it faces uncertainties related to the upcoming presidential election and the future of U.S. clean energy policy.

Shares of computer memory and data storage provider Micron Technology (MU) fell 3.8%. The stock has also benefited from AI-related optimism, but Micron gave a soft revenue outlook when it reported quarterly results last week, raising questions about its growth trajectory.

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