The budget impasse and resulting partial government shutdown entered its third day on Thursday, after a meeting between President Barack Obama and Congressional leaders failed to yield a solution on Wednesday.
In an exclusive interview with CNBC, President Barack Obama said markets should be worried by the gridlock in Washington.
"This time I think Wall Street should be concerned," Obama said. "When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble."
(Read more: Wall Street wonders: Does Obama want a selloff?)
Deutsche Bank's Gael Gunubu said it was now increasingly likely the budget debate would be folded into the forthcoming battle to raise the debt ceiling before October 17, in order to avoid a default.
"If that occurs, it's likely that Obamacare will be added to the debate on social security and tax reform, among other contentious issues, increasing the already massive stakes of the debt limit discussion," she said in a morning research note.
In company news:
BlackBerry shares slipped despite an upgrade from Citigroup, which said the troubled smartphone maker's shares had been punished enough. The stock was off 1.6 percent in premarket trading.
Constellation Brands rose 2.5 percent on a solid earnings report that saw the spirits maker post a 96-cent profit, despite a weak top line.
Eli Lilly shares fell 1 percent, despite news from the drugmaker that it plans on launching several new drugs this year that target "unmet patient needs."
Factory orders data will not be released now because of the shutdown but the ISM (Institute of Supply Management) non-manufacturing survey will still be published on Thursday. The Federal Reserve's Richard Fisher, Jerome Powell, John Williams and Dennis Lockhart are also scheduled to speak.
In Asia, data out on Thursday showed China's official services purchasing manager's index (PMI) rose to a six-month high in September, lifting hopes the country's growth is picking up.
(Read more: Asian stocks higher after upbeat China data; Japan bucks trend)
In Europe, Italian stocks were boosted by Prime Minister Enrico Letta's triumph in a confidence vote on Wednesday. This followed a dramatic u-turn by rival politician, Silvio Berlusconi, who said he would support Letta, after Berlusconi's party members rebelled against his move to pull down the government.
Earnings reports will be thin on the ground on Thursday, with Constellation Brands due to publish quarterly numbers before Wall Street opens.