Index futures are futures markets where the underlying commodity is a stock index, such as the Dow, S&P 500 or the Nasdaq. Stock futures cannot be traded directly, so futures based on stock indexes are the way in which stock indexes are traded. Index futures are traded basically the same way as any other commodity future such as wheat, gold, coffee or crude oil. Futures market will usually tell you the direction of the market before it opens. For example, if the Dow futures are -30 points, there is usually a good chance that when the market initially opens in the morning that the index will be down about 30 points. This, however, is no perfect prediction of how the market will close. Many times the futures market will be down before the market opens, but the corresponding index will actually be higher when the market closes and visa versa. I would recommend that you watch CNBC or Fox Financial news in the morning to experience firsthand the correlation of stock index futures with the actual stock market. By, the way I don't recall the Dow futures ever being -522 points. If nothing drastic happens to change the perception of the market between now and the opening bell at 9:30 EST, the Dow may be down by around 500 points shortly thereafter.
