Futures Prices and Spot Prices

[Davidee]

Hello,

Right now the S&P 500 futures contract price is lower than the S&P 500 spot price.

I guess this means the market expects the S&P 500 to fall, right? Are these assumptions that 'the market make usually right?

 

[Mornington Crescent]

always remember that its you who is making the assumptions

 

[Davidee]

So what does it generally signal though? When the spot market is higher than the futures price?

 

[Mornington Crescent]

do I gather you are a beginner ?

where to start ?

(Spot) Cash Market is always cum div
Futures are always Ex div

 

[Dick Lexic]

Hello,

Right now the S&P 500 futures contract price is lower than the S&P 500 spot price.

I guess this means the market expects the S&P 500 to fall, right? Are these assumptions that 'the market make usually right?

don't really know about this but i have heard the term "inverted markets" a quick shearch brought up this....

Inverted Market financial definition of Inverted Market. Inverted Market finance term by the Free Online Dictionary.

 

[scose-no-doubt]

The SP futures are discounted for opportunity cost from the current spot price. There are many component of the discount factor but I'd assume the main one is the expectation that dividends are to be paid as someone mentioned earlier.

Economics Interactive Tutorial: Discounting Future Income