Tencent (TCEHY, 0700.HK) — the parent company of social media app TikTok — shares are trading higher after announcing layoffs at video game developer Riot Games, joining the ranks of companies rolling out job cuts in 2024.

Yahoo Finance Markets Reporter Josh Schafer cites Goldman Sachs' latest jobless claims analysis and what recent labor market trends could mean for the Federal Reserve's dual mandate.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: Well, shares of Tencent-- they're trading higher this morning after announcing its video game developer, Riot Games, is laying off about 11% of its staff. Tencent following in the footsteps of dozens of other companies like Amazon and Alphabet, making job cuts in the new year.

In a Goldman Sachs note out this week, the firm suggesting that tech layoffs are not concerning, and that the labor market is normalizing to pre-pandemic levels. With what these layoffs mean for the broader labor market, "Yahoo Finance" reporter, Josh Schafer, is here.

Josh, this was one of our themes last week once we got even more of those cuts that started to come to light. Labor market in limbo. So what is Goldman saying here?

JOSH SCHAFER: Yeah, Brad, so you talk about labor market in limbo, and then in that same week, we had jobless claims hit their lowest level since September of 2022, right? And weekly jobless claims, if you dig deep into the economic community, you'll get varying thoughts on how accurate those are, but we look for overall trends here, right?

And I think Goldman had two key graphs I want to point out in this note. The first one is those jobless claims that they were highlighting, and also not just jobless claims but overall layoff mentions. So they highlighted in that, you can see jobless claims and layoff references. That's in the actual jobless claims report.

There's more than just the number that comes with that are actually very low. That's your dark purple line there. And so overall, you're seeing these numbers-- if we just look at the trend, right-- are about 2019 levels. Like we're talking 200,000 people applying for these, on average, about a week.

And then really, the other important graph here is not only-- is that what we're seeing but also when you take a look at unemployed workers, they're still getting jobs. And that's an important part when we talk about the labor market here. So I reached out to a couple other economists and sort of got their thoughts on if these headlines matter overall.