U.S. stocks closed higher on Wednesday as investors shook off a plunge in oil prices and digested the Federal Reserve's meeting minutes as mostly dovish.
"Apple and the energy stocks are definitely having a (negative) effect on the Dow," said Paul Nolte, portfolio manager at Kingsview Asset Management. "I think it is a reaction in general to the Fed."
The Federal Reserve Open Market Committee released the minutes of its March meeting, revealing that central bank policy makers were divided over the timing of an interest rate hike.
"The minutes are peppered with a lot of dovish language," said Stephen Freedman, senior investment strategist at UBS. "That's why things have come full circle and it wasn't really market moving."
The S&P 500 and Dow initially dipped into negative territory before turning around to attempt gains on a more dovish take.
The Nasdaq outperformed the other major indices, closing up 40.59 points, or 0.83 percent, at 4,950.82.
The Dow Jones Industrial Average closed up 27.09 points, or 0.15 percent, at 17,902.51, with Nike leading gains and Chevron and Exxon Mobil the greatest laggards. Apple closed down 41 cents, or 0.33 percent, at $125.60 a share.
The closed up 5.57 points, or 0.27 percent, at 2,081.90.
The immediate reaction held that the Fed was "slightly more hawkish than we anticipated," said Art Hogan, chief market strategist at Wunderlich Securities.
In the minutes following the release, the dollar jumped about a third of a percent, with the euro back below $1.08. The U.S. 2-year Treasury note yield gained to 0.54 percent, while the 10-year Treasury note yield held steady near 1.91 percent.
"It's tough to read anything into the minutes other than they remain data dependent," said Chris Gaffney, president of EverBank World Markets. "The data since March has been negative and that would put a hike in September."
Read MoreFed members torn over rate hike timing, with some seeing 2016,minutes show
The Fed dropped "patient" from its March meeting statement as an indication it is setting up for normalization of monetary policy. The overall tone of the minutes was expected to remain dovish, but signs of division among the members over the timing of a rate hike initially led to a more hawkish interpretation.
However, the minutes showed only one policymaker saw inflation from wage growth. With the majority of the committee still seeing little inflationary pressure, "that means the Fed is a long, long way from tightening," said John Canally of LPL Financial.
Stocks traded choppily throughout the day, with the Dow and S&P 500 dipping into negative territory following a discouraging oil inventory report that sent oil prices sharply lower. The decline came after the Dow briefly gained 100 points in morning trade.
The market "looks like it wants to move higher but I still hear a lot of concern among investors about earnings," said Bruce McCain, chief investment strategist at Key Private Bank. "The overall tone of the market is trying to adjust to the disappointing tone in earnings and economic data."
U.S. stocks faded in the close on Tuesday to end mildly lower, breaking two days of gains.
The U.S. Energy Information Administration said weekly crude inventories rose by 10.9 million barrels, nearly a 14-year high and more than expected, adding to pressure on the commodity prices.
Brent was down more than 5.5 percent to below $55 a barrel, and crude settled down $3.56, or 6.6 percent, at $50.42 a barrel.
Earlier, oil prices fell more than a percent after data from the American Petroleum Institute (API) showed U.S. crude stocks surged 12.2 million barrels last week against analyst expectations for an increase of 3.4 million barrels.
The decline in oil follows a rally on Monday and Tuesday, when U.S. crude approached 2015 highs.
Read MoreThese energy stocks are rooting against crude oil
Still, oil continued to hold in a range. Stable prices bring more predictability, said Mark Luschini, chief investment strategist at Janney Montgomery Scott. Oil "volatility could be unwelcome for the market."
European equities closed flat despite a surge in energy stocks following news that Royal Dutch Shell will buy BG Group for $70 billion in cash and stock in the first major oil company takeover deal since Chevron bought Texaco for $36 billion in 2000.
"This move by Shell and BG raises hopes that the crash in oil prices is stabilizing and the global economy will pick up speed perhaps rather sooner than anticipated, about 6 months," said Peter Cardillo, chief market economist at Rockwell Global Capital.
Read MoreVolatile oil, a dovish Fed, and start of earnings
New York Federal Reserve President William Dudley said Wednesday morning that payroll growth has been stronger than the overall economy and "something was off."
"Again we have this information void that gives investors little impetus to get out in front of it," Luschini said.
In the morning, a Federal Reserve governor, Jerome Powell, said that the central bank needs "more proof" that the job market is tightening.
Fed Chair Janet Yellen said in late March speech that the central bank will watch for weakness in inflation and wages before commencing a gradual rate hike.
Total mortgage application volume rose 0.4 percent week-to-week on a seasonally adjusted basis for the week ending April 3, according to the Mortgage Bankers Association (MBA). The move was driven entirely by a 7 percent surge in applications by homebuyers.
In a week of light economic data, analysts will watch weekly jobless claims on Thursday for indications on whether or not March's disappointing labor report was pressured by one-time factors.
"I think we still need to wait and see here until earnings start coming in a week or two," said Nick Raich, CEO of The Earnings Scout.
Major U.S. Indexes
Alcoa kicks off corporate earnings season, with its first quarter earnings expected after the closing bell, when Bed Bath & Beyond also reports. Earnings season gets into full swing next week when major banks and technology companies report.
Family Dollar reported earnings before the bell that missed on both the top and bottom lines.
Read MoreAlcoa starts earnings season...or does it?
"We think the market is set up to rally in response to earnings because overbought conditions are uncommon and breakdowns are few," BTIG chief technical strategist Katie Stockton in a note. "A positive catalyst would come from a breakout above the upper boundary of the intraday trading range, around 2089 for the SPX."
The initial Apple Watch reviews came out mostly positive on Wednesday morning.
Generic and specialty pharmaceuticals company Mylan has proposed buying Perrigo for $205 per share in a cash-and-stock deal, Mylan said Wednesday. Perrigo confirmed that it received "an unsolicited, indicative proposal from Mylan regarding a possible offer for the Company." Shares of both firms surged more than 15 percent on the news.
Tesla announced an upgrade of its flagship Model S, featuring a larger battery pack and all-wheel drive.
Walt Disney and IMAX have renewed their movie exhibition deal, covering releases from Disney, Pixar, Marvel, and Lucasfilm.
Read MoreEarly movers: RDSA, TSLA, MRK, RAD, DLTR & more
Oil and gas exploration and production company Noble Energy will cut about 220 positions, about half at Noble's Colorado operations.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.
The Russell 2000 gained more than half a percent to 1,261.
The Dow transports closed up 0.71 percent as the airlines gained.
Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 765 million and a composite volume of 3.2 billion in the close.
Gold futures settled down $7.50 at $1,203.10 an ounce on the New York Mercantile Exchange.
—CNBC's Peter Schacknow contributed to this report.
On tap this week:
Wednesday
Earnings: Alcoa, Bed Bath and Beyond, Pier 1 Imports
Thursday
Earnings: Walgreen Boots Alliance, Constellation Brands, Ruby Tuesday, PriceSmart
8:30 a.m.: Initial claims
10:00 a.m.: Wholesale trade
1:00 p.m.: $13 billion 30-year auction
Friday
8:30 a.m.: Import prices
8:45 a.m.: Richmond Fed President Jeffrey Lacker on economic outlook
12:20 p.m.: Minneapolis Fed's Kocherlakota
2:00 p.m.: Federal budget
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