US Markets

Dow closes down 178 points amid Greece concerns; transports plunge 1.9%

Euro leaders hint at little progress on Greece
Euro leaders hint at little progress on Greece
Pisani: Icahn's influence on the markets
Pisani: Icahn's influence on the markets
Cashin says: Greece political cliffhanger
Cashin says: Greece political cliffhanger

U.S. stocks closed lower on Wednesday as investors weighed the renewed impasse in the Greece debt talks and digested domestic data. (Tweet This)

"It's all about Greece and continued strength in the U.S. (economy). Those are the two trends. It really depends on the day of the week to determine what's dominating," said Krishna Memani, chief investment officer at Oppenheimer Funds.

The Dow Jones industrial average extended losses in the close to end nearly 1 percent lower, off 178 points. The Dow transports ended 1.86 percent lower in correction territory as railway stocks dragged all components lower.

"I think there's a little more to this decline than the Greek story," said Peter Cardillo, chief market economist at Rockwell Global Capital. Greece is "sort of just an excuse, but I think the real factor is end-of-quarter selling by institutions, mainly in utilities, materials and transports."

Analysts also pointed to the tendency for a negative market bias in the week after quadruple witching, which took place last Friday.

Quincy Krosby, market strategist at Prudential Financial, said investors are also anxious about earnings growth and the possibility of a short-term interest rate hike as early as September.

"If the market believes the Fed moves in September, they're going to want to unwind some of their positions for fear liquidity (declines) and volatility picks up," she said.

Read MoreHow US stocks have reacted to Greece

The euro group meeting of regional financial ministers ended without a resolution, while talks are expected to resume on Thursday at 11:00 GMT (7:00 a.m. ET). The leaders did not strike an optimistic tone in their comments about the discussions.

"Basically what we're doing is peeling away the euphoria that we had about Greece (at the beginning of the week)," said Art Hogan, chief market strategist at Wunderlich Securities.

Early on Wednesday, a Greek government official said that Prime Minister Alexis Tsipras told associates that creditors did not accepted Greece's proposed measures, Reuters reported on Wednesday. Prior to the news, recent reports had indicated progress towards a resolution ahead of Greece's June 30 payment deadline to the International Monetary Fund.

"Greece continues to cause volatility because they didn't put forth the structural reforms Europe wants. Europe continues to hold out but net-net, a deal gets done," said Doug Cote, chief market strategist at Voya Investment Management.

To be sure, most analysts believe the cash-strapped country will reach a resolution with its creditors, albeit at the 11th hour.

The Nasdaq Composite briefly turned higher in mid-morning trade to hit a new intraday high. The index closed a record on Tuesday and set an intraday high during the trading session. The S&P 500 also briefly followed the Nasdaq into positive territory.

"I think there's a growing sense that June 30 doesn't necessarily mean it will end in crisis. There will be a resolution, not a simple 'Grexit,'" Jack Ablin, chief investment officer at Harris Private Bank, said of the early attempt at gains. He also cited optimism on the morning's upwardly-revised consumer spending figure in the GDP

After the close on Tuesday, Netflix announced a seven-for-one stock split, payable on July 14 to shareholders of record as of the close of business on July 2. Activist investor Carl Icahn announced on Wednesday he sold the last of his shares in the video streaming service.The stock ended about 0.40 percent lower after initially spiking more than 2 percent to a record high.

Apple closed up 0.91 percent after jumping more than 1.5 percent amid Icahn's remarks on CNBC's "Fast Money:Halftime Report" that "Apple is where Netflix was a couple years ago."

Read More Icahn warns markets 'extremely overheated,' especially in junk bonds

In U.S. economic news, the final read on first-quarter gross domestic product (GDP) data showed a decline of 0.2 percent, in-line with expectations and above a previous estimate of a 0.7 percent contraction.

Encouragingly, consumer spending was revised up to 2.1 percent from the initial 1.8 percent.

The improved read supports the improving trend in more recent economic reports that indicate moderate growth in the second quarter. Better performance strengthens the Federal Reserve's case for raising short-term interest rates as early as September.

Futures held lower after the GDP report as traders remained focused on Greece, with the Dow futures off about 70 points.

Analysts pointed out the S&P 500 failed to break its record high of 2,130.82 in the last few days despite Nasdaq setting records on Tuesday and Monday.

"The market just can't seem to get enough demand to push equity prices higher," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. The U.S. economy is still "not uber vigorous and there's still lingering concerns about what's going on in Greece so we still seem to be locked in this trading range."

The 10-year Treasury yield traded near 2.38 percent, while the fell to 0.67 percent. The U.S. dollar held lower, with the euro creeping above $1.12.

"The data we've seen over the last couple days hasn't supported 'higher dollar, lower euro,'" said John Caruso, senior market strategist at RJO Futures, noting the decline in headline durable goods orders. "It just looks like day-to-day sideways action."

The U.S. Treasury auctioned $35 billion of 5-year notes at a high yield of 1.710 percent in tepid demand.

U.S. stocks closed mildly higher on Tuesday as investors remained optimistic on the Greece debt talks and eyed continued signs of moderate economic growth.

In corporate news, Sysco's planned merger with U.S. Foods has been temporarily blocked by a judge for further review.

Kroger, SuperValu and other supermarket stocks are in focus after Dutch supermarket operator Ahold announced a deal to buy Belgium's Delhaize. Ahold operates the Stop&Shop and Giant chains in the United States, while Delhaize is the parent of Food Lion. Tyson Foods and McCormick hit all-time highs on Wednesday.

Read MoreEarly movers: LEN, NFLX, MKC, WFM, BA, FCX & more

Homebuilders jumped after Lennar topped earnings estimates on both the top and bottom lines as the housing market improved.

Major U.S. Indexes

The Dow Jones Industrial Average closed down 178.00 points, or 0.98 percent, at 17,966.07, with DuPont leading laggards and Apple the only advancer.

The closed down 15.62 points, or 0.74 percent, at 2,108.58, with materials leading all 10 sectors lower.

The Nasdaq