Investment Report 3 rd Quarter Prompt

Surname 1
Student Name
Instructor’s Name
Investment Report 3
Quarter Prompt
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
Surname 2
inflation problem by adjusting interest rates upwards, therefore, the fear of investors that Fed
would adjust interest rates upwards if inflation was to pick up.
Another likely aspect that caused investors to worry might have been the prices of bonds.
Inflation affects those directly. The stock market indicated a higher rate environment, which
optimized the investor sentiments for steady economic growth. Hence, the increase in the rate of
inflation had a significant impact on the prices of bonds.
In summary, sudden changes in fiscal and monetary elements, such as in interest rates,
commodity prices, unemployment, and wages caused volatility in the U.S. stock market. While
the situation did not escalate to the level of a market crash, it was worth the concern for many
Surname 3
Works Cited
Free Republic, “Dow Plummets 666 Points,” Analyzed by Jess Kitting, 3
Feb 2018,
Imbert, Fred, and Silvia, Amaro. “Dow Plummets 666 Points, Capping Worst Week in 2
Years.” CNBC, CNBC, 2 Feb. 2018,

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