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Eyes on Greece as stocks shake oil drop

Greek news remains in focus for U.S. stocks on Wednesday in the absence of significant domestic news.

"The Greek headlines are going to keep moving us around," said Art Hogan, chief market strategist at Wunderlich Securities. "This market is pretty much tied to our perceptions of how close we are to a deal on Greece."

The country's finance minister, Yanis Varoufakis, will meet with other finance ministers of the euro zone on Wednesday. He is expected to propose the creation of a bridge program with creditors in September, the Greek newspaper Ekathimerini reported late on Monday.

A man walks inside the Athens stock exchange February 3, 2015.
Yannis Behrakis | Reuters
A man walks inside the Athens stock exchange February 3, 2015.

Hogan expected a breakthrough or at least a temporary fix from the meeting, both of which would be a positive turn of events.

IHS Global Insight Economist Diego Iscaro said Greece and the euro zone leaders should reach a deal that is "closer to what the EU is proposing rather than what the Greeks are proposing."

On Tuesday, German Finance Minister Wolfgang Schaeuble refuted speculation that the European Commission would be ready to extend Greece's bailout, which expires on Feb. 28.

Read MoreGreeks soften tone as Germans stand firm

The news sent the Dow Jones industrial average down to single-digit gains before the index recovered to close up about 140 points, at 17,868.76, with Pfizer and Coca-Cola leading gains. Caterpillar was the greatest laggard.

Save for a move by the ECB, Greek government debt will officially cease to be valid collateral for bank loans on Wednesday as well.

"This (discussion) is going to be pushed on and on and on," said Martin Schulz, head of PNC Capital Advisors' International Equity Fund. He said Greece would probably stay in the European Union.

To be sure, Maris Ogg, president at Tower Bridge Advisors, said that Greece's debt issues are several years old and that countries such as Greece and Italy were different enough from Germany that they would be better off economically if they left the European Union.

The once recent driver of U.S. markets, oil only moved the energy sector on Tuesday in the second-straight day that stocks moved opposite to movements in the commodity.

Crude oil futures settled down $2.84 at $50.02 a barrel on the New York Mercantile Exchange. Greek concerns sent U.S. stocks lower to close in the red on Monday, despite oil settling higher.

"Oil has lost a bit of its headline-grabbing status," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The major indices rallied to close higher for the year, with the Dow up 0.26 percent year-to-date.

The S&P 500 closed up 0.47 percent for the year at 2,068.59, with utilities leading all sectors higher except energy. The Nasdaq closed up at 4,787.64, up 1.09 percent for the year.

On Wednesday, investors will also weigh remarks by the Fed's Stanley Fischer. Two Fed officials said on Tuesday that a rate hike should come sooner rather than later.

Several analysts saw the Greek situation as more of a backdrop to the more important story of fourth-quarter earnings.

"Earnings are what drive stocks ultimately," said Dan Veru, chief investment officer at Palisade Capital Management.

As earnings season winds down, consumer names such as PepsiCo, Time Warner, Cheesecake Factory and Panera Bread will report on Wednesday. Cisco and Tesla will also report after the bell.

"The general disappointment that you're not seeing anyone step up expectations because of the lower energy costs," said Bruce McCain, chief investment strategist at Key Private Bank, noting the poor outlook was due to "natural business cautiousness."

Read MoreApple basically saved this earnings season

Of the S&P 500 firms that have already reported, just 39 companies beat expectations for the last quarter and raised expectations for the current quarter, according to The Earnings Scout.