U.S. stocks closed slightly higher on Thursday, extending the prior day's rebound, as negative news out of Greece counterbalanced a good retail sales report. (Tweet This)
In mid-morning trade the International Monetary Fund spokesman said there were "major differences" with Greece on aid negotiations and that the IMF team has left Brussels, where the talks were held, Reuters said.
The news pressured stocks, with the Dow Jones industrial average closing about 40 points higher, off earlier gains of 100 points. The Nasdaq Composite also briefly fell into negative territory in midday trade. The major indices opened higher on signs consumer spending was picking up and hopes that Athens was close to a resolution with its creditors.
"I do think the Greece situation just continues to be a little of a headwind," said Ben Pace, chief investment officer at HPM Partners.
European stocks pared gains from earlier hopes of a Greece deal, with the DAX closing 0.6 percent higher after earlier rising 1.5 percent. The ATHEX Composite ended 8.16 percent higher. European officials had said there was a "good chance" of a deal ahead of the euro group meeting next week.
Greece's Prime Minister, Alexis Tsipras, and European Commission President Jean-Claude Juncker ended talks on the debt negotiations without coming to a resolution. A European Union diplomat told Reuters the discussion was a "last attempt" to reach a deal, while Dow Jones reported that Juncker said in a statement that he held an "important, friendly and constructive meeting" with Tsipras.
Analysts remained optimistic that Greece would come to a deal with its creditors.
"We used a lot of the internal energy in yesterday's moonshot," said Jeffrey Saut, chief investment strategist at Raymond James. "I think Greece is not impactful. ... I think there's going to be a solution on Greece. They're not going to pull out."
U.S. stocks bounced on Wednesday, closing more than 1 percent higher amid some encouraging signs on talks between Greece and its creditors on a cash-for-reform deal.
Transports continued to recover on Thursday, rising 1 percent, with railroads leading the way higher as CSX shot up 3 percent.