U.S. stocks took a big hit Monday, with the Dow Jones Industrial Average closing at a one-month low, as investors grew more worried about a possible debt default in Washington.

The Dow dropped 136.34 points, or 0.90 percent, to 14,936.24 points. The Standard & Poor's 500-stock Index slid 14.38 points, or 0.85 percent, to 1,676.12 points. The Nasdaq Composite Index plunged 37.37 points, or 0.98 percent, to 3,770.38 points.

The market took a dive in the final trading hour of the session as investors are growing more concerned about the fiscal gridlock, which also pushed most of stocks outside the United States into negative territory Monday, as the country's debt ceiling deadline is looming.

"If the United States government, for the first time in its history, chooses not to pay its bills on time, we will be in default," warned U.S. Treasury Secretary Jacob Lew in a television interview aired on CNN's "State of the Union" Sunday.

The federal government shutdown dragged on into the second week with little sign of progress in budget negotiations in Congress.

U.S. House Speaker John Boehner said Sunday that the lower chamber would not pass bills to end government shutdown or raise debt limit until President Barack Obama chooses to negotiate.

However, Obama has urged lawmakers to reopen the government and raise the debt limit with no conditions attached.

On the economic front, U.S. consumer credit rose at an annual rate of 5.4 percent to 3.04 trillion U.S. dollars in August, according to the U.S. Federal Reserve, beating market consensus.

Meanwhile, with the third-quarter earnings reports season set to kick in, analysts said continued fiscal bickering may overshadow the influence of the earnings season.

Aluminum giant Alcoa and financial giants of JP Morgan Chase and Wells Fargo are due to report their earnings later this week.

The CBOE Volatility Index, widely considered as a fear gauge of the market, soared 15.89 percent to end at 19.40.

In other markets, U.S. oil prices fell Monday on growing concerns over the budget deadlock in Washington. Light, sweet crude for November delivery decreased 0.81 dollar to settle at 103. 03 dollars a barrel on the New York Mercantile Exchange. While Brent crude for November delivery gained 0.22 dollar to close at 109.68 dollars a barrel.

Gold future for December delivery on the COMEX division of the New York Mercantile Exchange jumped 15.2 dollars to settle at 1, 325.1 dollars per ounce Monday, as market sought for a safe haven in gold against uncertainties about the U.S. debt discussion.

The U.S. dollar slipped against most major currencies Monday on concerns that the United States may fail to raise the debt ceiling before the deadline.

In late New York trading, the euro rose to 1.3577 dollars from 1.3558 dollars of the previous session, and the dollar bought 96. 91 Japanese yen, lower than 97.41 yen of the previous session.

Source: Xinhuanet