The S&P 500 and the Nasdaq edged lower Tuesday, the final day of the third quarter, on worries that a looming U.S. government shutdown could jeopardize the timely release of economic data.

Sentiment turned risk averse a day after equities posted gains, underscoring how sensitive investors still are to any sign of uncertainty.

While previous shutdowns have had a limited impact on markets, some analysts warned the current episode could be more disruptive given the economic backdrop is delicate.

"I don't think it will be disruptive for the market in the long term. However, it does inject more uncertainty in monetary policy and fiscal policy," said Eric Teal, chief investment officer at Comerica Wealth Management.

At 10:58 a.m. ET, the Dow Jones Industrial Average fell 120.23 points, or 0.26%, to 46,195.84, the S&P 500 lost 5.34 points, or 0.08%, to 6,655.87, and the Nasdaq Composite was up a mere 11.11 points, or 0.05%, to 22,600.35.

Communication services stocks on the S&P 500 fell 1.3%, dragged by losses in Meta Platforms and Alphabet, which fell 1.9% and 1.4%, respectively. The stocks also weighed on the Nasdaq.

Consumer discretionary shares lost 0.9% on the S&P 500, while energy declined 1.1%. Technology added 0.3%. A rise in healthcare stocks limited losses on the Dow.

A Labor Department report showed job openings rose to 7.23 million in August, compared with 7.19 million estimated by economists Reuters polled.

Another data point showed U.S. consumer confidence declined more than expected in September.

Meanwhile, Fed Vice Chair Philip Jefferson warned the job market could face stress without central bank support, while Boston Fed President Susan Collins said she is open to additional rate cuts.

Traders will also look to a busy slate of Fed speakers for direction as they speak later in the day.

Equities have held up well through the third quarter, with the benchmark S&P 500, the tech-heavy Nasdaq and the blue-chip Dow Jones Industrial Average all set to notch gains for the second straight quarter.

The benchmark S&P 500 is on track for its best third-quarter performance since 2020.

Markets will now enter the fourth quarter, historically a favorable stretch for equities due to year-end positioning and holiday spending.

Earnings commentary will be in the spotlight during the period, especially as several companies indicated plans to raise prices, which could have implications for inflation and, by extension, the Fed's policy path.

Chipmaker Wolfspeed surged 36.3% a day after exiting bankruptcy. Firefly Aerospace dropped 24.5% after a testing mishap destroyed the core booster for its centerpiece Alpha rocket.

Paychex fell 6%, to the bottom of the benchmark index, after the HR platform reported its quarterly results.

Lamb Weston rose 7.8%, topping the S&P 500 after the frozen-potato products maker beat analysts' estimates for first-quarter revenue and profit.

Declining issues outnumbered advancers by a 1.06-to-1 ratio on the NYSE and by a 1.27-to-1 ratio on the Nasdaq.

The S&P 500 posted 34 new 52-week highs and two new lows, while the Nasdaq Composite recorded 63 new highs and 36 new lows.