Investment Report 3
Friday, the 2
of February was not an ordinary day for those trading in the stock market.
The interplay between various fiscal and monetary policy factors almost resulted in the crashing
of the market. Even though it managed to correct the situation, investors were worried about the
value and price of different stocks that plummeted during the short-time plunge. The prices of
stocks fell abruptly because of changes in interest rate, and in the patterns of investment, prices,
and unemployment, among others.
On 2 February, the prices of stocks fell suddenly primarily due to a significant increase in
interest rates. “U.S stocks fell sharply on Friday after a stronger-than-expected jobs report sent
interest rates higher” (qtd. in Free Republic; Imbert and Amaro). Historically, the U.S. has had
low unemployment, but usually the labor market has more open jobs which exceed the number
of qualified workers available to accept them. Also, investors have for a long time been
concerned about the possibility of interest rates being increased by the Federal Reserve Bureau.
Previously, the U.S had experienced a strong economy characterized by steady rising of stocks,
low unemployment and open job openings in the labor market. Besides, employers started to pay
their employees more to retain the workers and attract more qualified ones. Another likely result
was an eventual rising of commodity prices hence causing inflation. Since the Fed resolves