"It's irrational selling," said Peter Boockvar, chief market analyst at The Lindsey Group, noting that Moody's already had a lower "Caa1" credit rating on Greece.
Earlier, stocks traded moderately higher as cheer over a strong jobs report was slightly offset by increased potential for an earlier Fed interest rate hike.
"This is a solid report," Cardillo said. "This certainly shows the job market continues to grow. Revisions (for previous months) revised up. I think it will all be market friendly."
Financials, a likely beneficiary of higher interest rates, initially rose by as much as more than 1.5 percent as a leading sector in the S&P 500, which declined on Greek news but still held near the key 2,060 level.
Top blue chip performers JPMorgan Chase initially traded by as much as more than 3 percent higher, and Goldman Sachs also traded nearly 2 percent higher.
"The stock market wants it every which way," Boockvar said. "The bottom line is the data continues to pressure the Fed into raising rates."
On the flip side, utilities traded lower, closing down 4.13 percent as the weakest sector in the S&P 500.
"We know we have a very cautious and patient Fed," said Art Hogan, chief market strategist at Wunderlich Securities. "What we have to focus on is a stronger U.S. economy."
Atlanta Fed President Dennis Lockhart on Friday said he thinks the U.S. economy continues to grow strongly enough to justify an initial interest rate hike later this year, but that weak inflation and wage growth were "worrisome."
The Labor Department said the United States created 257,000 jobs in January, beating estimates of about 230,000. More importantly, average hourly earnings grew by 0.5 percent, above estimates.
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The unemployment rate rose to 5.7 percent, slightly above estimates.
"The unemployment rate went up for the right reason—participation rate going up," Hogan said.
Futures turned higher on the news with Dow futures extending gains from 9 points to as much as more than 80 points. The U.S. 10-year Treasury note yield rose from about 1.80 percent to as high as 1.91 percent before the open.