Stock futures fall heading into first full week of trading in October, Dow futures shed 100 points
Tesla bucked the trend after the company said this weekend that it delivered 241,300 electric vehicles during the third quarter, well above analysts estimates.
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Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City.
Spencer Platt | Getty Images
U.S. stock futures were lower on Monday as investors readied for the first full week of trading of October.
Dow futures fell 124 points, or 0.4%. S&P 500 futures shed 0.4% and Nasdaq 100 futures lost 0.5%.
Tech shares including Nvidia and Zoom Video were slightly lower in premarket trading as investors eyed bond yields. A surge in rates to end September knocked highly valued tech stocks. The 10-year Treasury yield was higher Monday, trading around 1.49%.
Tesla bucked the trend however, rising 2% in premarket trading after the company said this weekend that it delivered 241,300 electric vehicles during the third quarter, well above analysts estimates.
"The on-again, off-again nervousness about Federal monetary policy, the disruption among supply chains and the potential for higher taxes (along with other concerns such as inflation risk and higher taxes) have kept market enthusiasm in check," wrote John Stoltzfus, Oppenheimer Asset Management's chief investment strategist, in a note Monday. "Meanwhile rotation and rebalancing efforts along with some profit taking by skeptics, bears and nervous investors account for a significant part of market activity on any given day."
"Curiously, investor worries about COVID-19 and its variant seem to have begun to play a lessor day-to-day 'worry role' in the markets of late than over the course of the summer," he added.
Friday marked the first trading day of October and the final quarter of 2021. The major averages rose that day on promising data for Merck's oral treatment for Covid-19, which boosted stocks tied to the economic reopening.
The market rebound followed a rough September plagued by fears of inflation, Federal Reserve tapering and rising interest rates. The 10-year rate topped 1.56% last week, its highest point since June.
The S&P 500 finished the month down 4.8%, breaking a seven-month winning streak. The Dow and the Nasdaq Composite fell 4.3% and 5.3%, respectively, suffering their worst months of the year.
The fourth quarter is typically a good period for stocks, but overhangs like central bank tightening, the debt ceiling, Chinese developer Evergrande and Covid-19 could keep investors cautious. 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.
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"Q4 2021 will likely record a higher-than-average return. However, investors will need to hang on tight during the typically tumultuous ride in October, which saw 36% higher volatility when compared with the average for the other 11 months," notes CFRA chief investment strategist Sam Stovall.
One of the first hurdles markets face in the new quarter is Friday's closely watched employment report, which could spur the Federal Reserve's decision on when to taper its bond-buying program.
Economists expect about 475,000 jobs were added in September, according to an early consensus figure from FactSet. Just 235,000 payrolls were added in August, about 500,000 less than expected.
"Markets this week are likely to take their cue from economic data as they look to Friday's employment report for clues as to the strength of the US economy," said Oppenheimer's Stoltzfus.
—CNBC's Patti Domm contributed to this report.
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