Why Nvidia Stock Rebounded Today

Actions of Nvidia (NASDAQ: NVDA) were recouping losses from yesterday’s rout today as investors enjoyed a “risk-off” move following several volatile sessions in Nvidia and the broader market.

Today’s jump was triggered by a jobs report that showed a decline in initial unemployment claims, allaying fears that the economy was possibly headed for a recession after the July unemployment rate jumped 4.1% to 4.3%.

As a result, Nvidia shares were trading up 6.3% at 2:17 p.m. ET, while the Nasdaq jumped 3% at the same time.

Nvidia is at the mercy of the market

Chip Stocksincluding Nvidia, largely recovered today after initial unemployment claims fell to 233,000 last week from 250,000 the week before.

Normally, this type of data wouldn’t move markets, but investors are closely watching employment data for signs that the economy may be weakening more quickly than expected.

Last week, a rise in initial unemployment claims to the highest level in nearly a year and disappointing July employment numbers helped trigger a sell-off that sent the Nasdaq down 8% in a three-day period. Nvidia was hit even harder, falling 14% during the meltdown.

Why Nvidia Stock Is So Volatile Right Now

Nvidia and its semiconductor peers operate in a highly cyclical industry. In the best case scenario, as in the last year and a half, demand and prices soar, generating billions in profits. In tougher times, the industry is plagued by excess inventories, falling prices and sometimes huge losses.

The chip sector appears to be at a tipping point right now. Investors would like to be convinced that the AI ​​boom can continue and that the US economy is strong enough to support it. Big tech stocks like Microsoft It is Alphabetwhich are some of the biggest customers of chipmakers like Nvidia, sold after their recent earnings reports, in part due to doubts that the billions they were spending on AI infrastructure would pay off.

For the AI ​​boom to continue, the economy will have to avoid a recession, so it’s understandable that a seemingly lower economic figure would send Nvidia and its peers soaring. Investors want assurances about the macro environment and they just got some.

In the long term, Nvidia will need strong demand for its AI components to continue, which could rely on the development of a “killer AI app” or more convincing that generative AI is truly transformative.

For now, the next big event for investors to watch is the company’s second-quarter earnings results, expected on August 28th. Stocks will almost certainly swing wildly on the update, and the recent stock sell-off could help fuel a rally.

The story continues

Until then, stay tuned for more economic data and expect more outsized reactions from the AI ​​chip superstar.

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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The motley fool has a disclosure policy.

Why Nvidia Stock Rebounded Today was originally published by The Motley Fool