Index Futures are agreements whose value has been derived from a financial index. They are basically agreements to trade the value of an index at a future time. It reflects the expectations of the index’s future direction in price. These index futures are now open to individual investors. These contracts can be used to speculate on the price direction indexes, such as the DJIA (Dow Jones Industrial Average) and the S&P 500.
Possible choices may lead to interesting changes
U.S. stock index futures rose on Friday after President Donald Trump’s temporary pick for a Federal Reserve governor fueled expectations of a more dovish central bank board. A dovish approach, as utilized by the central bank, uses all possible means to promote some economic growth. Inflation here is not a concern. The dovish policy in itself is marked by a fall in interest rates as well as the use of unconventional measures to boost the economy. These are mostly applied during periods of recession or overheating of the economy.
Trump said on Thursday he would nominate Council of Economic Advisers Chairman Stephen Miran as Fed Governor Adriana Kugler’s interim replacement, following Kugler’s surprise resignation last week. American economist Adriana Debora Kugler served as a member of the Federal Reserve Board of Governers. Before she previously served as the US executive director at the World Bank.
U.S. stocks lost steam on Thursday after Bloomberg Newsย reported thatย Fed Governor Christopher Waller is emerging as a top candidate to be the central bank’s next chair. Trump has repeatedly criticized Fed Chair Jerome Powell for not cutting interest rates and has accelerated the search for a replacement after several retracted threats to oust Powell before his term ends on May 15.
An upcoming Fed shake up on the cards
The White House’s push to overhaul the central bank’s leadership has fueled worries about its independence. At the same time, investors believe revising Fed leadership could favor looser monetary policy that aligns with Trump’s agenda. According to the CME Group’s FedWatch tool, traders broadly expect the Fed’s first rate cut of the year next month and see at least two reductions by year-end.
At 5:31 a.m. ET, S&P 500 E-minisย EScv1ย were up 16 points, or 0.25%, Nasdaq 100 E-minisย NQcv1ย were up 72.25 points, or 0.31% and Dow E-minisย YMcv1 were up 61 points, or 0.14%. The Nasdaqย .IXIC eked out a record closing high on Thursday after signs that major technology firms could avoid Trump’s new tariffs on chip imports by manufacturing in the United States.
Leading factors that influence the Futures
But the S&P 500. SPX and the Dow. DJI.DJIย ended lower, weighed down by a 14.1% drop inย Eli Lilly LLY.Nย after results from a late-stage study on its experimental GLP-1 pill fell behind that of Novo Nordisk’sย NOVOb.CO. Meanwhile, U.S. tariffs on a bunch of trading partners took effect at midnight on Thursday. Tokyo’s trade negotiatorย saidย Washington will amend a presidential executive order to remove overlapping tariffs on Japanese goods,ย terming it as oversight.
In earnings-related moves, Trade Deskย TTD.O sank 29% in premarket trading after the ad-tech firmย reportedย a sharp slowdown in second-quarter revenue growth. Pinterestย PINS.N tumbled 12.5% as the social media platformย missedย analysts’ estimates for second-quarter profit. Microchip Technologyย MCHP.Oย lost 7.9% after the chipmaker’s first-quarterย resultsย failed to impress investors.
Futures contracts are traded on exchanges; their prices being influenced by a variety of factors. A primary influencing factor is the overall health of the economy. Indicators such as inflation rates, GDP growth as well as employment data can significantly impact the sentiment of the market participants. A positive economic indicator may most probably lead to an increased demand for stock index futures. This will drive their prices higher.
GCN.com/REUTERS.