There are concerns that Congress will be unable to adequately deal with the country's debt ceiling woes, which means the government risks defaulting on its debt next month. Treasury Secretary Jack Lew warned Tuesday that Wall Street should take the looming debt limit more seriously.
Investors also considered the possibility that the U.S. government might shut down on Oct. 1, which could hit economic growth.
"Debt ceiling fears have seen risk aversion return," wrote Societe Generale analyst Kit Juckes in a market report. He compared the impending government shutdown and the prospect of raising the debt ceiling to "observing a man holding a loaded shotgun, pointed at his own foot."
Global stocks also lost ground. Asian markets ended Wednesday's session mostly lower, with Japan's Nikkei index declining 0.8%. The Shanghai Composite also weakened, but the Hang Seng in Hong Kong bucked the trend to close slightly higher.