U.S. investors were largely able to brush off weakness overseas sparked by worries about the European periphery and slowing growth in China. China's official service sector Purchasing Managers' Index declined to its weakest level in nine months in June.
Concerns about political instability in Portugal, and debt refinancing in Greece, pressured European stocks with the Portuguese stock market falling 5 percent.
"Markets are speculating about the fate of the (Portuguese) prime minister, and to the extent that this problem reflects concerns over Euro inspired austerity, there are wider implications," UBS global economist Paul Donovan wrote in a note.
U.S. oil prices soared to a 14-month high above $101 a barrel on Wednesday, following a decline in crude stockpiles, and concerns that unrest in Egypt could disrupt oil supplies.
Despite fears of Fed tapering and weakness in global markets, "there's a lot of underlying strength in the (U.S.) equity market," Doug Foreman, co-chief investment officer at Kayne Anderson Rudnick Investment Management, said. "The key questions over the next six to nine months will be does employment continue to improve, does consumer confidence continue to improve, does housing — which is driving the other two — continue to improve."
—By CNBC's Justin Menza. Follow him on Twitter