Let's test the accuracy of futures markets today. Specifically: Dow Jones industrial average futures. Roughly an hour before the start of trading in New York, the Wall Street Journal is reporting that the Dow will bounce back from its horrible Tuesday, based on current futures trading activity betting that the Dow will rise 62 points after the bell rings. The reason: Amazon's after-hours report Tuesday that it had tripled its profits, combined with Boeing's swing back into the black.
The New York Times reports that Amazon's blockbuster quarter can be partly attributed to the indefatigable Harry Potter. Although actual sales of "Harry Potter and the Deathly Hallows" won't be booked until the third quarter, collateral activity by Potter fans who purchased other Amazon goods while preordering the latest Harry Potter book was responsible for an 8 percent sales increase all by itself. This raises the kind of question How the World Works loves asking: Can a teenage wizard wave his magic wand and make the housing bust go away?
Time for a rebound? The Journal is careful to note, as it always does in its daily pre-start-of-trading gaze into the magic ball, that "changes in futures do not always accurately predict early market moves after the opening bell." A highly anticipated data point for the housing market -- existing-home sales -- will be released at 10 a.m. Eastern, and bad numbers there might well spook investors worse than You-Know-Who.
Let's see what happens. Remember, this is only a test.
UPDATE: As of 10:53 a.m., Eastern, the early word is not too encouraging. The Dow did spike up right after the trading bell rang, but then headed directly towards negative territory. Existing home sales dropped 3.8 percent, month-over-month, to the lowest level in five years.
SECOND UPDATE: Well, by golly, the Dow closed up 65.93 points. That's close enough to where Dow futures were trading an hour before the New York Stock Exchange opened as to be positively spooky.