Dow drops 1%, below 18,000 as Greek talks hit snag

Stocks tumbled Wednesday as Wall Street dropped for the first time in three sessions after Greek debt talks appeared to hit a snag.

The Dow Jones industrial average ended down 178 points, or 1%, to 17,966.07. Dropping 0.7% was the S&P 500, which ended at 2108.58.

Retreating 38 points from its record close on Tuesday was the Nasdaq composite, off 0.7% to 5122.41.

Greece and its international creditors continued to meet but Greek Prime Minister Alexis Tsipras suggested Wednesday that international creditors did not accept the latest round of reform proposals from Athens. The talks ended without a deal and will resume on Thursday.

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"Overnight, some of the recent euphoria around a resolution to the Greek crisis was unwound (amid reports that) underscored that many questions still remain," Barclays told its clients, adding that the firm's economists remain "cautiously optimistic" that a deal will get done.

The latest rancor between Greece and its creditors caught some investors, such as Paul Hickey at Bespoke Investment Group by surprise.

"It's quite surprising to us that creditors took such a hard line versus a Greek proposal that accepted a wide range of austerity and sustainability measures," Bespoke told its clients.

But Bespoke, like other investment firms, isn't giving up hope for a deal.

"The rejection is by no means the end of the week's maneuvering," Bespoke stressed, adding that the Eurogroup's meeting later today presents another chance to get a deal done.

The yield on the 10-year Treasury note fell to 2.38% from 2.40% Tuesday.

Overseas, Japanese stocks rose as the Nikkei 225 hit an 18-year high by gaining 0.3% to close at 20,868.03.. Hong Kong's Hang Seng index gained 0.3% and the Shanghai Composite surged 2.5%.

European stocks were mostly lower as optimism about a potential Greek debt deal faded. Germany's DAX index was down 0.6%, France's CAC 40 fell 0.3%. Athens' ASE index fell 1.8%. Britain's FTSE 100 bucked the downward trend and rose 0.2%.

Tuesday, U.S. rose as the Nasdaq reached a new closing high for a second straight day. The Nasdaq gained 6.12 to close at 5160.10 and the Dow added 24.29 to 18,144.07.