Stocks rally on good jobs data, proving it's too early to write off the U.S. economy

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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets rally: Markets on Thursday are trying to rally again after a vicious midday reversal in the prior session. The nearly 3% gain for the tech-heavy Nasdaq Composite and more-than-2% advance for the S & P 500 are helping the indexes recover a big chunk of this week's losses. Still, we'll need to see another big green day Friday to avoid what could be the fourth straight weekly decline. As of about 2:40 p.m. ET Thursday, the Nasdaq and S & P 500 were down about 0.8% and 0.6% week to date, respectively. The Dow Jones Industrial Average, which added more than 600 points Thursday, is down about 0.8% for the week. Within our portfolio, Eli Lilly was the top-performing stock Thursday, up more than 9%, fueled by its blowout quarterly results . All three of our chip names — Broadcom , Nvidia and Advanced Micro Devices — weren't too far behind the drugmaker. While it's been an up-and-down stretch for the semiconductor group, Broadcom and AMD were positive on the week thanks to Thursday's gains. Good news is good news : One of the key catalysts to Thursday's rally came from an economic release we see each week: initial jobless claims. The market was on edge before this release because it was the first labor market data point since last Friday's pivotal nonfarm payroll report. That release showed a lower-than-expected increase in jobs in July and an unexpected increase in the unemployment rate, which sent markets into a frenzy on concerns about an imminent recession. It also prompted many market participants to criticize the Federal Reserve, which days earlier left interest rates unchanged, as being too far behind the curve with its restrictive policy. Combined with some other weak data points last week, the July jobs report created this so-called "growth scare" that the market is still working through. We think it's still way too premature to write off the U.S. economy, which is why we've been taking advantage of the recent weakness to add to our positions in Wells Fargo and several industrials. That served as the backdrop for Thursday's initial jobless claims report. So, when first-time filings for unemployment benefits declined 17,000 from the previous week to 233,000 — and were lower than the estimate for 240,000 — equity markets cheered and Treasury yields pushed higher. After being stuck in a period when the market liked weaker numbers because it meant inflation was cooling, good news about the economy is good news. Up next: After what's been a volatile week for the markets, there won't be a ton of news to trade off in Friday's session. The few notable earnings reports Thursday night are from Take-Two Interactive , e.l.f. Beauty , Paramount Global , Trade Desk and Array Technologies , which is Club holding Nextracker 's primary competitor in the solar-tracking market. There are no major earnings or economic data releases Friday, but July consumer price index report is right around the corner. It's set to be released at 8:30 a.m. ET Wednesday. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.