Unemployment just hit 14.7% yet market futures predicted big stocks gains. Please explain! investinyou (In partnership with acorns.)
to be, Petiri says. It's a way of predicting trends, "a marketplace that allows people to put an expected price on commodities and assets in the future."Here's why the futures market predictions may be out of sync with real-time prices.
By the time the markets open in the morning, there may have been news that the Federal Reserve or Congress or a corporation such as Microsoft, Google or GM did something. Perhaps they're coming out with significant earnings, Petiri says. "That would mean the later round of futures contract markets changed," he said.
Let's say you're buying stock. At 10 o'clock one morning, you're willing to pay $50 per share for some stock. Twenty minutes later, perhaps you're willing to pay $60 or $40 — depending on news.With a 14.7% unemployment rate, why was the futures market up 275 points? Short answer: The number is 14.7% and not 17.4%. "The market expected it to be worse," Petiri says. "People were expecting a number at 16 or 17."
That would be much worse than 14.7%, so Wall Street is basically saying, "Things are bad but not as bad as they could be, and it's going to get better."
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