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Stocks wavered at the opening on Friday, with major averages looking to stabilize following a few days of sharp losses, but the government shutdown -- now in its fourth day -- as well as a looming debt-ceiling deadline, kept investors on edge.
The Dow Jones Industrial Average was 11 points lower in early morning trading after finishing below the 15,000 mark on Thursday for the first time since early September.
The S&P 500 and the Nasdaq also slid in and out of the red in early trading. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 17.
"This is similar to previous U.S. government shutdowns, which were not particularly negative for broader risk appetite… In foreign exchange, the U.S. dollar is generally weaker, inconsistent with a typical risk-off environment," wrote Barclays' Hamish Pepper and Barry Knapp in a research note.
U.S. Treasury prices moved lower, suggesting a weakening bid for "safe-haven" assets. Yields on benchmark 10-year Treasurysstood at 2.62 percent on Friday.
President Obama canceled a trip to Indonesia to attend the APEC (Asia-Pacific Economic Cooperation) conference, to focus on budget negotiations as well as the looming deadline for raising the U.S. debt ceiling.
"U.S. politics will inevitably dominate again today. And there still looks to be no near-term end in sight for the fiscal farce, with Republican House Speaker Boehner up against it, as he will have another go today at forging a more pragmatic position within his party," wrote Chris Scicluna, an economist at Daiwa Capital.
(Read more:Boehner to GOP: I won't let the nation default)
"But the Republican headbangers hardly look like budging. And in the meantime, the economic disruptions caused by the shutdown both in the U.S. and beyond, and arguably more significantly, the uncertainty and hit to confidence from fears over the debt ceiling not being lifted, will intensify," Scicluna added.
The monthly government jobs report has been delayed due to the shutdown. About 180,000 jobs were expected to have been added in September, up from 169,000 added in August.
Several Federal Reserve officials were scheduled to speak on Friday. These include two voting members of the FOMC (Federal Open Market Committee), William Dudley and Jeremey Stein.
Speaking in Washington on Thursday, Christine Lagarde, managing director of the International Monetary Fund, said that a failure to raise the debt ceiling before October 17 could hurt the global economy, and warned that U.S. economic growth could drop below 2 percent this year.
Similarly, Bank of Japan Governor Haruhiko Kuroda warned that the fiscal standoff could destabilize global financial markets if it dragged on. The Japanese central bank opted to maintain its massive stimulus program.
(Read more:Track Asian markets here)
In Europe, investor attention remained on Italy. Former Prime Minister Silvio Berlusconi faced another political test on Friday as the Italian Senate votes on whether to expel him from politics for a tax fraud conviction he received in August.
If the vote goes against Berlusconi it will pass to the Upper House in two weeks' time. The Senate vote comes after a turbulent week in which Berlusconi bowed to pressure from his own party to support Prime Minister Enrico Letta in a vote of confidence on Wednesday.
The Italian FTSE MIB Index was the standout gainer among European indexes, posting moderate gains.
(Read more:Track European markets here)
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