"We believe the U.S. government shutdown over the continuing resolution should be primarily seen through one prism – does it increase or decrease the chances of a smooth resolution to the debt ceiling? For now, the markets seem to believe that this shutdown will cause only minor disruption and will, at the very least, not worsen the debt ceiling negotiations – and we agree," Barclays analysts Hamish Pepper and Ajay Rajadhyaksha said in a research note.
Weekly mortgage applications slipped last week as a drop in demand for purchase loans outweighed an increase in refinancing demand, according to the Mortgage Bankers Association.
Two Federal Reserve officials Eric Rosengren and James Bullard will also be speaking on the economy.
Monsanto slumped after the agricultural biotechnology company posted quarterly results that missed expectations and handed in full-year earnings that also fell short of estimates.
Microsoft ticked lower after three of the top 20 investors in the software giant lobbied to press for Bill Gates to step down as chairman of the company he co-founded 38 years ago, according to sources.
Alcoa slid after Deutsche Bank cut its rating on the aluminum producer and former Dow component to "sell" from "hold."
Across the Atlantic, Italy faced its own political difficulties, with Prime Minister Enrico Letta due for a confidence vote on Wednesday. The vote comes after five ministers from Silvio Berlusconi's center-right party tendered their resignations at the weekend at his behest. Letta has rejected the resignations and Berlusconi could now face a rebellion in the confidence vote.
In addition, the European Central Bank will hold its policy-setting meeting later in the day. Investors are likely to focus on whether the central bank will hint at the need for further long-term refinancing operations (LTRO) to help support the economy.