What happened
Shares of Meta Platforms (META -0.52%), the parent company of Facebook, were rising quickly today on seemingly no company-specific news. Instead, a rebound in the tech sector appears to be sending Meta's stock higher today.
The tech stock had gained 5.8% as of 1:22 p.m. ET on Friday.
So what
Investors have been driving down tech stocks lately as they worry about inflation, which is currently at a 40-year high. Technology stocks like Meta, in particular, have suffered as investors view the sector as riskier compared to other investments.
Image source: Getty Images.
If inflation continues to persist at elevated levels, the Federal Reserve will continue to raise the federal funds rate. And investors have been concerned that aggressive moves by the Fed to push down inflation could end up severely hurting the economy.
If that were to happen, Meta's massive advertising business could slow down as companies pull back on spending.
Those worries, in part, have resulted in Meta's share price plummeting 50% over the past 12 months. But shares are rebounding today as some investors appear to be coming back to the technology sector.
The tech-heavy Nasdaq Composite was up by 2.4% today, likely as some investors believe many technology stocks have finally bottomed out. That may or may not be true, but Meta shareholders appear to have a similar sentiment today.
Now what
Meta's rise today, while certainly good news for shareholders, should also be viewed cautiously. Investors are still processing a lot of information about inflation and a potential recession, which is likely to keep the market volatile over the short term.
Meta shareholders should keep a close eye on the company's upcoming financial report to see if there are any additional insights from management about inflation or the economy. The tech company is expected to report its next quarterly figures at the end of July or early August.
