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Stock futures are flat heading into first full week of trading in October


Traders in New York City work at the New York Stock Exchange (NYSE), September 30, 2021.

Spencer Platt | Getty Images

As investors waited for the start of October’s trading, U.S. stock markets were stable in overnight trading Sunday.

Dow futures gained about 40 points. S&P 500 futures gained 0.06% and Nasdaq 100 futures were flat.

Friday marked both the October 1st and Quarter 3 of 2021 trading days. Stocks tied to economic recovery were boosted by the news that Covid-19 had been approved for oral treatment.

After a September that was plagued with fears about inflation, Federal Reserve tapering, and increasing interest rates, the market recovered. Last week’s 10-year interest rate reached 1.56%, the highest level since June.

The S&P 500 finished the month down 4.8%, breaking a seven-month winning streak. The Dow Composite dropped 4.3% and the Nasdaq Composite fell 5.3% in the worst month of the year.

Stocks are generally good in the fourth quarter, however, overhangs such as central bank tightening and debt ceiling could make investors nervous. Heading into the fourth quarter, more than half of all S&P stocks are off at least 10%.

The S&P 500 has averaged gains of 3.9% in the fourth quarter and was up four out of every five years since World War II, according to CFRA.

The expected return for Q4 2021 is higher than average. But investors need to remain calm during the volatile October ride. This was 36% greater than the average volatility for the past 11 months. Sam Stovalll, CFRA chief investment strategist, says that this will be a challenge.

The Friday employment report is one of the biggest hurdles for markets in this quarter. It will be closely watched and could influence the Federal Reserve’s decision about when to reduce its bond-buying program.

According to FactSet, economists anticipate that 475,000 new jobs will be created in September. This is a consensus estimate. Just 235,000 payrolls were added in August, about 500,000 less than expected.

—CNBC’s Patti Domm contributed to this report.