U.S. stocks dropped on Wednesday, with the blue-chip Dow suffering its worst day since Dec. 28 as investors worried that eurozone countries may delay bailout payments to Greece.

The Dow Jones industrial average lost 97.33 points, or 0.76 percent, to close at 12,780.95. The Standard & Poor's 500 dropped 7.27 points, or 0.54 percent, to 1,343.23. The Nasdaq Composite Index fell 16.00 points, or 0.55 percent, to 2,915.83.

The finance ministers of 17 eurozone nations canceled a meeting on concerns about the lack of assurances from Greek leaders to stick to spending cuts. Instead, the ministers held a teleconference in Brussels and said they had made "substantial further progress."

However, investors were still worried Greece could not secure the bailout money it desperately needed in time until the final deal is sealed.

The losses extended in afternoon trading after news showed policy-makers in the Federal Reserve were divided on whether there is need to launch another round of quantitative easing measures.

According to minutes of the Fed's last policy meeting, members of the central bank's policy-making committee remained divided over a new round of bond buying to boost the economy.

At the Jan. 24-25 meeting, a few members of the committee thought it was necessary to ease monetary supply before long, or in 2012, given continued high unemployment and a lack of inflation pressure.

However, others thought that more bond buying would be necessary only if the economic outlook deteriorated or if inflation seemed likely to remain below 2 percent.

Major indexes were modestly higher earlier in the session after China said it will get more involved in Europe's bailout effort, adding some optimism to the market.

Also providing some support, Wednesday's data showed manufacturing activity expanded for the third consecutive month to the highest level in more than one and a half years, the New York Federal Reserve said in a report on Wednesday.

The February Empire State Manufacturing general business conditions index rose to 19.53 from 13.48 in January, the highest level since June 2010, and stronger than market expectation.

In other markets, the U.S. dollar traded mixed against major currencies in late New York trading while oil prices surged amid sharply lower crude inventories and increasing risks of oil supply disruption in the Middle East.

Light, sweet crude for March delivery gained 1.06 dollars, or 1.05 percent to settle at 101.80 dollars a barrel on the New York Mercantile Exchange.