Stocks end lower as government closing looms

• 1 day left to avert gov%27t shutdown crisis
• Global markets show signs of jitters
• Investors wait and watch%2C but confidence takes hit

Stocks ended lower Monday as investors brace for a partial government shutdown as early as midnight.

The Dow Jones industrial average closed down 128.257 points, 0.8%, to 15,129.67. At the session's low, the index was down by more than 170 points.

The benchmark Standard & Poor's 500 index closed down 10.20 points, 0.6%, to 1,681.55. And the tech-laden Nasdaq composite index finished down 10.12 points, 0.3,%, to 3,771.48.

Markets are under pressure as a budget battle in Washington threatens the first government shutdown in 17 years. Congress faces a midnight deadline to avert the crisis.

Despite the fact that Wall Street has gone through prior budget battles in recent years, the chronic inability of lawmakers to compromise on fiscal matters and their tendency to squabble right up to key deadlines has investors on edge once again. It is also causing volatility to spike.

"The rancorous debate in Washington does little to generate investor confidence," notes Tobias Levkovich, an investment strategist at Citigroup.

The political dysfunction coincides with the last trading day of the third quarter and ahead of a spate of market-moving headlines in coming days and weeks, including soon-to-be-released third-quarter corporate earnings reports, another fight mid-month in the nation's capitol over raising the debt ceiling, and the Federal Reserve's next policy meeting near the end of October.

Despite the recent drop in stocks amid the fiscal uncertainties, the S&P 500 is still up more than 4% for the quarter and is up almost 18% for the year. The Dow is up 1.5% in the third quarter and more than 15% for the year.

In addition to the hit to investor confidence if a government shutdown occurs, a shutdown would cause many government workers to be furloughed, which will likely weigh on economic growth and hurt corporate profitability in the final three months of the year, warns Sam Stovall, chief equity strategist at S&P Capital IQ.

Stovall cites the "continued uncertainties from Washington" as a "headwind" for stocks.

Global stocks were under pressure also Monday as the U.S. budget battle dominated the news. Japan's Nikkei 225 index fell 2.1% to 14,455.80 and Hong Kong's Hang Seng index dropped 1.5% to 22,859.86.

Markets in Europe were further exercised by renewed political crisis in Italy, where former prime minister Silvio Berlusconi said over the weekend that he will push for snap elections. A confidence vote on Prime Minister Enrico Letta's administration is due Tuesday. Italy's FTSE MIB index was down 1.2%.

Markets across Europe fell, as Britain's FTSE 100 dropped 0.8% to 6,462.22 and Germany's DAX index fell 0.8% to 8,594.40. France's CAC 40 ended down 1% 4,143.44.

Benchmark oil for November delivery fell 57 cents to $102.31 per barrel in electronic trading on the New York Mercantile Exchange.

The yield on the bellwether 10-year Treasury note fell to 2.62% from 2.63% Friday.

On Friday, the Dow fell 0.5%, the S&P 500 dropped 0.4% and the Nasdaq lost 0.1%.

Contributing: The Associated Press