NEW YORK, Oct. 3 (Xinhua) -- U.S. stocks pared early losses but still fell across the board Thursday, as market concerns grew over a budget stalemate in Washington.
The Dow Jones Industrial Average plunged 136.66 points, or 0.90 percent, to 14,996.48 points. The Standard & Poor's 500-stock Index sank 15.21 points, or 0.90 percent, to 1,678.66 points. The Nasdaq Composite Index plummeted 40.68 points, or 1.07 percent, to 3,774.34 points.
A partial U.S. federal government shutdown entered into a third day Thursday, after a White House meeting between U.S. President Barack Obama and congressional leaders on Wednesday afternoon ended with no breakthrough.
Obama said Wednesday that it is important for Wall Street to recognize that this is going to have a profound impact on the economy.
The first government shutdown in 17 years came after Congress failed to pass a spending bill by Monday's midnight deadline. Republicans in the House of Representatives are demanding changes to Obama's signature health care law in exchange for funding the government, which the White House opposes.
The market eased off session lows on a New York Times report saying House Speaker John Boehner had pledged that he is determined to prevent a federal default, citing an unidentified House Republican lawmaker.
Following the report, a spokesperson of Boehner issued a statement, saying "speaker Boehner has always said that the United States will not default on its debt, but if we're going to raise the debt limit, we need to deal with the drivers of our debt and deficits. That's why we need a bill with cuts and reforms to get our economy moving again."
The CBOE Volatility Index, widely concerned the best gauge of fear of the market, jumped more than 6 percent to 17.67.
Economic data of the country came in mixed. The number of Americans who initially applied for jobless benefits last week rose 1,000 to 308,000 from the previous week, the Labor Department said Thursday, less than the market consensus. The four-week moving average, a smoother measure, fell 3,750 to 305,000, the lowest level since May 2007, it added.
Meanwhile, U.S. economic activity index in the non- manufacturing sector registered 54.4 in September, lower than August's reading of 58.6 percent, said the Institute for Supply Management.
On other markets, the U.S. dollar dropped against most major currencies, as a partial U.S. government shutdown raised speculations that the Federal Reserve may delay tapering.
The euro strengthened against the dollar after London-based Markit Economics reported Thursday that the purchasing managers index of service sector in the euro zone rose to 52.2 in September, up from 50.7 in August.
In late New York trading, the euro rose to 1.3621 dollars from 1.3581 dollars of the previous session. The dollar bought 97.23 Japanese yen, lower than 97.39 yen of the previous session.
Oil prices continued to retreat on rising concerns that government shutdown and failure to raise the debt ceiling would hurt economic growth and oil demand pressured oil prices.
Light, sweet crude for November delivery slipped 0.79 dollars to settle at 103.31 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery lost 0.19 dollars to close at 109.00 dollars a barrel.
Gold futures on the COMEX division of the New York Mercantile Exchange dipped. But market analysts said if government shutdown extends into next week, gold may rise.
The most active gold contract for December delivery dropped 3.1 dollars, or 0.23 percent, to settle at 1,317.6 dollars per ounce.