Daiwa Capital Markets' Grant Lewis said the negative impact on growth would be directly proportional to the length of the shutdown.
"With the deadline to extend the debt ceiling (17 October) also rapidly approaching, the longer there is no agreement on getting the government back up and running, the greater concerns will be over getting agreement on the debt ceiling, further fueling economic uncertainty," he wrote in a note.
Meanwhile, Apple climbed near session highs after billionaire investor Carl Icahn said he "pushed hard" for a $150 billion buyback during his dinner meeting with CEO Tim Cook on Monday.
"We decided to continue dialogue in about three weeks," Icahn continued in his Tweet.
Ford Motor climbed after the automaker posted a 6-percent increase in its September sales. Meanwhile, rival General Motors edged lower after the car maker's sales declined 11 percent in the same period.
Among earnings, Walgreen rallied after the drugstore chain posted earnings that edged past expectations and announced a 4.6-percent increase in same-store sales.
Merck climbed to top the Dow gainers after the pharmaceutical giant announced plans to slash an additional 8,500 jobs on top of previously announced cuts, adding that it planned to cut operating expenses by $2.5 billion by the end of 2015.
Amazon.com rose after the online retailer said it will hire more than 70,000 seasonal workers during the holidays to meet an increase in customer demand.
Citigroup gained after Credit Suisse raised its target price on the financial giant to $65 from $60.
Yelp rallied after Cowen and Company lifted its target price on the consumer review website to $80 from $60.
Stocks in Asia and Europe mostly moved higher in early trade on Tuesday, with Italian stocks paring losses from the previous session's heavy selling. The country's benchmark FTSE MIB recovered somewhat on reports that Silvio Berlusconi's center-right party could rebel if he continues to threaten to bring down the government.
(Read more: Italian companies implode amid government turmoil)
Meanwhile, Japan's benchmark index pared gains, following an earlier 1 percent spike after Prime Minister Shinzo Abe decided to raise the national sales tax to 8 percent from 5 percent. Investors now expect a hefty stimulus package worth $50 billion to help mitigate the tax hike impact.