Week of 08/05-08/09 Stock Market Comeback, Best Two-Day Run of 2024

The stock market rallied earlier this week to mark the best two-day gain of 2024. This followed the recent selloff from last week where we saw a major pullback due to economic pressures and weak jobs report numbers. Even after days of extended selling pressure, the stock market was able to gain back positive ground. This just shows how volatile the market can be, but also how sensitive the current investment and trading climate is in reference to cooler economic data.

The Initial Jobless Claims report came out this week showing numbers falling to its lowest in the past eleven months. This helped boost the market as investors gained confidence from the strong labor market results on top of the already weekly positive sentiment.

Big tech performed well this week with the recent recovery, but chip manufacturing pressures still remain as demand grows for AI chips. This reflected in big names as Nvidia, with its stock falling behind the magnificent seven group performance after last week's selloff. NVDA stock is down over 20% from its recent highs and was recently upgraded to a buy at $120 per share by New Street Research. Additionally, rumors of a possible delay for Nvidia’s Blackwell next-generation chip added pressure on the stock earlier this week. Chip manufacturer TSMC, Nvidia supplier, recently posted a 45% year-over-year increase in sales in July which signals that AI demand remains incredibly strong.

What is the Initial Jobless Claims report and why is it important?

The Initial Jobless Claims report is a weekly economic indicator that measures the number of individuals who have filed for unemployment benefits for the first time. It is released by the U.S. Department of Labor and provides insights into the health of the labor market, as well as trends in job losses or gains.

This report is important because it offers a timely and high-frequency snapshot of the labor market's strength and can indicate the overall economic health of the country. Investors and analysts often use the Initial Jobless Claims data to gauge the level of job security, predict future consumer spending patterns, and assess the potential impact on economic growth. A higher-than-expected number of initial jobless claims may suggest weakness in the labor market and the broader economy, while a lower number may indicate a stronger job market and economic conditions.