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NEW YORK (CNNMoney)
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq all dropped nearly 1% in early trading Monday.
More selling ahead? Despite Monday's slide, the three major indexes are still up between 15% and 24% for the year. The Dow and S&P 500 are up over 3% in September alone, and hit record highs just two weeks ago. All three indexes are up for the quarter, led by the Nasdaq, which has risen 11%.
But some strategists are predicting that stocks should fall further if the government closes up shop -- even if it's only a brief shutdown.
Related: 8 things you need to know about the debt ceiling
Citigroup analyst Tobias Levkovich said that the "rancorous debate in Washington" coupled with slowing economic growth could push the S&P 500 down to 1600, a drop of more than 5% from its current level.
Levkovich and several other analysts also expect companies to cut their 2014 profit forecasts when they report third quarter earnings over the next few weeks. That could be another wake up call for investors, who had been bullish all year despite some big risks.
Related: Fear & Greed Index shows investors are becoming increasingly fearful
The shutdown isn't the only thing in Washington that investors are worried about. Stocks have pulled back recently as the U.S. gets closer to hitting the debt ceiling. If Congress fails to increase the debt limit, the U.S. government won't be able to pay all of its bills later this month.
Related: Obamacare and biotech boost health care stocks
What's moving: Shares of Apple (AAPL, Fortune 500) dropped more than 1% ahead of CEO Tim Cook's anticipated lunch meeting with activist investor Carl Icahn.
Social media stocks Facebook (FB), Zynga (ZNGA), and LinkedIn (LNKD) fell Monday. There is increased chatter that Twitter may file its financial statements with the Securities and Exchange Commission this week, although it's not clear if that will happen if the government shuts down.
Some investors believe that Twitter's upcoming initial public offering could steal some momentum from other social media stocks since it is assumed that Twitter's growth will be very strong.
J.C. Penney (JCP, Fortune 500) dipped sharply Monday morning before bouncing back. The retailer, which has been hemorrhaging money, announced last Friday that it had raised roughly $810 million through a public offering. Shares are trading near lows not hit since late 2000.
Related: How the government will shut down
Government shutdown hits world markets: European markets were all down in afternoon trading on fears over what the U.S. shutdown could mean for economies in Europe. Most Asian markets closed with losses, though the Shanghai Composite moved higher. China launched a free trade zone in Shanghai on Sunday, an experiment in promoting trade and expanding foreign investments in China. 
First Published: September 30, 2013: 9:55 AM ET
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