NEW YORK (TheStreet) -- Stock markets slipped from highs as the Federal Reserve outlined a possible rate hike increase even if core inflation remains below its 2% target rate.

"The Committee might begin normalization at a time when core inflation was near current levels, although in that circumstance participants would want to be reasonably confident that inflation will move back toward 2 percent over time," the central bank said in its December meeting minutes. The Fed reiterated a belief that the effect of low oil prices on the economy would be "transitory."

The S&P 500 was up 0.98%, curbing some of the gains achieved earlier. The Dow Jones Industrial Average climbed 1%, and the Nasdaq added 1.05%.

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Also at the December meeting, the central bank promised to be "patient" in determining when to raise interest rates, a sentiment that was echoed in the minutes.

"Most participants agreed that it would be useful to state that the Committee judges that it can be patient in beginning to normalize the stance of monetary policy; they noted that such language would provide more flexibility to adjust policy in response to incoming information than the previous language, which had tied the beginning of normalization to the end of the asset purchase program," the minutes read.

CRT Capital Group's David Ader summarized in an email, "We think the takeaway is obvious -- flexibility, some time before a hike, no wage pressures, better hiring. Our first read is neither more hawkish or dovish."

Earlier in the week, crude plummeted below $50 a barrel, its lowest point since early 2009. West Texas Intermediate crude is at more than half its mid-summer peak as global oil suppliers showed reluctance to cut production levels even as demand faltered.

Domestic crude oil inventories posted a surprise drop of 3.1 million barrels last week compared to a decline of 1.8 million a week earlier. Economists had expected inventories to tick up 0.9 million barrels. WTI crude was up 1.1% to $48.45 a barrel on Wednesday.

The private sector added 241,000 jobs to payrolls in December, according to the ADP National Employment Report. Economists had expected 235,000 jobs to have been added over the month. The latest figures further underline recent strength in a tightening job market. The Bureau of Labor Statistics will release the nonfarm payrolls report for December on Friday. 

The U.S. trade balance narrowed by a wider margin than expected to a deficit of $39 billion in November from a revised $42.2 billion a month earlier. Economists had expected a deficit of $41.5 billion.

"All of the narrowing was due to the effects of the lower oil price and a 15% month-on-month plunge in the volume of oil imports, to its lowest level since 1994," said Capital Economics senior U.S. economist Paul Dales in a note. "The more recent drop in oil prices will soon reduce the trade deficit by a further $5bn or so, to take it to a five-year low of $34bn."

Separately, 12 have been confirmed dead after three gunmen took siege of satirical newspaper Charlie Hedbo headquarters in Paris. French comic artist Jean Cabut and two police officers have been identified as victims. France's President Francois Hollande has labeled the shooting a "terrorist attack."

J.C. Penney (JCP) shares were surging more than 19% after the retailer reported a 3.7% increase in holiday sales over November and December. Fellow retailers Macy's (M) , Nordstrom (JWN) , Kohl's (KSS) , and Target (TGT) shared in the rally.

Dick's Sporting Goods (DKS) rallied nearly 9% on a report the retailer is exploring plans to go private. The company is currently engaging in discussions with several buyout firms, Reuters reported.

In earnings Wednesday, Monsanto (MON) beat first-quarter earnings estimates, sending shares 1.6% higher, though a warning of an expected 5% to 10% fall in second-quarter earnings limited upside potential. Sonic Corporation (SONC) was up more than 9% after first-quarter earnings exceeded forecasts and quarterly revenue scored double-digit percentage gains.

Joy Global (JOY) was moving lower on a downgrade to "hold" from KeyBanc with analysts expecting cuts to mining capital expenditures this year to stunt order growth to the maker of industrial machinery. American Express (AXP) shares climbed on an upgrade to "buy" from Goldman Sachs.

Long-suffering teen retailer Wet Seal (WTSL) announced it will close 338 stores, or around 66% of its locations, effective Wednesday. The closures will result in layoffs of nearly 3,700 full- and part-time workers. Shares were up 119%.

Keurig Green Mountain (GMCR) was up 4.7% after partnering with Dr Pepper Snapple (DPS) to sell soda capsules in its cold-drink machines in development. Keurig has plans to branch out from its traditional coffee-pod machines into the domain of SodaStream's (SODA) at-home carbonated beverage market.

PepsiCo (PEP) and Campbell Soup (CPB) shares were rallying after the Wall Street Journal reported Brazilian investment firm 3G Capital Partners' interest in potentially acquiring one of the companies. The firm has reportedly hived off $5 billion to form a new takeover fund.

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-- Written by Keris Alison Lahiff in New York.