NEW YORK ( TheStreet) -- Monday's stock selloff picked up speed in the final hour of trading, a warning sign that investors can expect more turmoil from Greece's debt crisis.
The S&P500 declined 2.08%, the Dow Jones Industrial Average fell 1.95%, or 350 points, and the Nasdaq slid 2.40%. The Dow is down 1.1% for the year, while the S&P 500 gave up almost all of its gains year-to-date.
With no deal in place, Greece is likely to default on its $1.7 billion payment due to the International Monetary Fund on Tuesday unless an 11th hour deal is made.
Talks broke down over the weekend between Greece and its creditors, but German Chancellor Angela Merkel and French President Francois Hollande said they're willing to continue negotiations with the debt-laden nation even after its July 5 referendum, according toBloomberg. That vote will allow citizens to decide if Greece should exit the eurozone.
On Sunday, it was announced that banks in Greece would remain closed until July 6 with ATM withdrawal limits of 60 euros a day. One Greek official, however, told CNBC that banks are set to open on Thursday.
Meanwhile, Standard & Poor's lowered Greece's long-term credit rating to "CCC minus" from "CCC" and pegs the odds of a "Grexit" at 50%.
"In our view, the Greek government's decision to hold a national referendum on official creditors' loan proposals indicates that Prime Minister Alexis Tsipras will prioritize domestic politics over the country's financial and economic stability, commercial debt service, and membership of the eurozone," Standard & Poor's said.
The CBOE Volatility Index I:VIX surged 34%, the biggest jump in a session this year. Yields on the benchmark 10-Year Tredssaasury dipped, reaching 2.3%, while gold prices rose 0.52% to $1,179.30 an ounce, as investors rushed into safer assets.
Despite the drama in Greece, the euro showed signs of life, gaining 0.63% against the dollar, after declining some 0.4% earlier in the session, as investors view the selloff as a buying opportunity.
Adding to global fears was Puerto Rico's debt crisis following Gov. Alejandro Garcia Padilla's comments that the island's $72 billion in debt is "not payable."
"Puerto Rico feels like came out of left field and I think explains the euro reversal vs. the dollar," said Ian Winer, head of equity trading at Wedbush Securities. "We've seen all kinds of funds reducing exposure to protect some gains on the year, but it's orderly and no real panic."
In the U.S., banks were hit the hardest. JPMorgan Chase (JPM) - Get Reportshares closed lower by 2.4%, while shares of Citigroup (C) - Get Report fell 2.5% and Bank of America (BAC) - Get Report slipped 2.9%.
Crude oil prices fell 2.18% on Wednesday, a three-week low, settling at $58.33 a barrel.
The selloff wasn't limited to U.S. stocks, as London's FTSE 100 ended the volatile session to the downside by 1.97%. European banks including Deutsche Bank (DB) - Get Report and BNP Paribas (BNPQY) traded lower by some 5%.
Stocks in China entered bear market territory, with the Shanghai Composite down 3.34% on Monday and the tech stock index, the Shenzhen, falling more than 6%. This comes as the People's Bank of China announced a rate cut on Monday. Stocks in Tokyo fell 2.88%, while Hong Kong's Hang Seng dipped 2.61%.