US stocks have retreated as a partial US government shutdown loomed due to Washington political gridlock over a new budget.

The Dow Jones Industrial Average was down 128.57 points (0.84 per cent) to 15,129.67 on Monday.

The broad-based S&P 500 dropped 10.20 (0.60 per cent) to 1,681.55, while the tech-rich Nasdaq Composite Index gave up 10.12 (0.27 per cent) at 3,771.48.

Stocks were in the red all day, but losses moderated as some investors hoped a last-minute compromise might avert the shutdown, slated for midnight on Monday.

“We’ve seen this movie before and we know it ends,” said Alan Skrainka, chief investment officer for Cornerstone Wealth Management. “Lots of drama, lots of excitement, and at the end, they kick the can down the road once again.”

Several leading consumer-goods equities fell after European peer Unilever warned of weakening sales in “many” emerging market countries. Dow component Procter & Gamble lost 2.1 per cent, Colgate-Palmolive fell 1.1 per cent and Kimberly-Clark dipped 0.7 per cent.

Some technology stocks faltered, including Oracle (-1.8 per cent), Facebook (-2.0 per cent) and Apple (-1.2 per cent).

But Microsoft was flat and Cisco gained 0.4 per cent.

Regeneron Pharmaceuticals rose 2.4 per cent after Bank of America Merrill Lynch raised its valuation target following a favourable presentation regarding its eylea drug at this weekend’s Retina Society meeting. Eylea treats diabetic macular edema.

Achillon Pharmaceuticals plummeted 58.3 per cent after announcing that the Food and Drug Administration decided to maintain its “clinical hold” on its sovaprevir treatment for the chronic hepatitis C virus. Achillon said it would continue to work with the FDA to try to progress the drug.

The yield on the 10-year Treasury held flat compared to Friday at 2.62 per cent, while the 30-year inched to 3.69 per cent from 3.68 per cent. Prices and yields move inversely.