NEW YORK (TheStreet) -- Stocks held onto session highs through to the closing bell on Wednesday, seemingly unperturbed by news the Federal Reserve will consider a 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," the central bank said in its December meeting minutes.

The S&P 500 was up 1.16%. The Dow Jones Industrial Average climbed 1.23%, and the Nasdaq added 1.26%.

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"The Fed has really telegraphed that the economy is strong enough to raise rates," said U.S. Bank regional investment strategist Jeffrey Kravetz in a call. "They don't want to be put in a box when it comes to inflation targets so I think it's just given them a little bit more flexibility."

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. "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.

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. West Texas Intermediate crude was up 1.4% to $48.58 a barrel on Wednesday. Earlier in the week, crude plummeted below $50 a barrel, its lowest point since early 2009 as global oil suppliers showed reluctance to cut production levels even as demand faltered.

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. 

All sectors rallied on Wednesday but retail was looking particularly bouncy. J.C. Penney (JCP) shares surged more than 20% 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)  climbed nearly 12% 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 1.3% 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) moved 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 137%.

Keurig Green Mountain (GMCR) was up 4.5% 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 rallied 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.