Dow Jones futures are steady near 47,100 during European trading hours, as traders wait for the US market to open. S&P 500 futures are flat around 6,770, while Nasdaq 100 futures have dipped 0.15% to about 25,250. In pre-market trading, Netflix has dropped more than 6.5% after its third-quarter earnings missed expectations. Mattel has also fallen over 5.5% due to disappointing results. On a positive note, Intuitive Surgical’s stock has soared over 15% thanks to strong quarterly performance.

US Index Futures Show Mixed Movements

US index futures are mixed as traders look forward to Tesla’s earnings report and upcoming US inflation data. The current US government shutdown is delaying key economic data, adding to market uncertainty. On Tuesday, the Dow Jones rose 0.47% to a record high, driven by strong earnings from major companies. The S&P 500 finished flat, while the Nasdaq 100 declined 0.16% as tech stocks lost some momentum. Coca-Cola shares increased by 4.1% due to strong consumer demand, and 3M jumped 7.7% after offering an optimistic full-year outlook. A Reuters poll shows that 115 out of 117 economists expect a Fed rate cut of 25 basis points on October 29. The Dow Jones Industrial Average (DJIA) includes the 30 most traded US stocks and is price-weighted. The DJIA is influenced by earnings reports, economic data, and Fed interest rates. Traders can engage with the DJIA through Dow Theory and options like ETFs, futures, and mutual funds.

Nasdaq Lagging Behind

While the Dow Jones hovers near a record 47,100, the Nasdaq is lagging behind. The Dow has outperformed the Nasdaq 100 by over 3% this month, marking the largest difference since the second quarter. This indicates a shift towards value investing, presenting opportunities for pairs trading, such as going long on Dow futures while shorting Nasdaq futures. Tesla’s upcoming earnings report is highly anticipated, particularly after Netflix’s disappointing results raised worries in the tech sector. Implied volatility for Tesla’s weekly options has surged past 80%, suggesting a significant price move—10% or more—in either direction. Traders might want to consider strategies like straddles or strangles to capitalize on this expected volatility, regardless of the earnings outcome. The uncertainty from the US government shutdown plays a significant role, as it delays important economic data and complicates the Federal Reserve’s decision-making process. During the 2018-2019 shutdown, the VIX remained elevated for weeks due to similar data delays. This historical context suggests that buying protection, like VIX calls or out-of-the-money puts on the S&P 500, may be wise to guard against sudden market shocks. All attention is on the Fed’s meeting next week, with futures pricing in a 92% chance of a 25-basis-point rate cut on October 29. While this expectation supports the market, it also poses a risk if the Fed delivers less than anticipated. Traders should stay alert for any changes in the Fed’s tone, as a hawkish surprise could quickly reverse the recent rally. Create your live VT Markets account and start trading now.

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