The S&P 500 hit its highest in three weeks, but concern about corporate earnings just ahead of the U.S. third-quarter reporting season kept trading choppy. Reduced profit forecasts from Adobe Systems (ADBE.O) and Yum Brands (YUM.N) late Tuesday added to gloom about the earnings picture.
Oil prices struggled to extend their recent rally as U.S. government data showed domestic crude inventories rose 3.1 million barrels last week, more than forecast.
The U.S. dollar rose against the euro EUR=EBS and the Swiss franc CHF=EBS, while the yen gained against the dollar after the Bank of Japan left monetary policy unchanged. The dollar was last down 0.24 percent against the yen at 119.950 yen JPY=EBS.
Although the Bank of Japan held off on expanding stimulus on Wednesday, expectations are growing of more support rather than less as worries mount over a global economic slowdown. This week, the International Monetary Fund again cut its global growth forecast.
The potential for more stimulus from the European Central Bank and the Bank of Japan has contributed to a backdrop of accommodative central bank policy, along with expectations that a Federal Reserve rate increase will remain on hold until 2016.
On Wall Street, the S&P 500 health care index .SPXHC was up 1.5 percent, in the biggest boost to the S&P 500, while the Nasdaq Biotech Index .NBI climbed 2 percent after recent steep losses.
"On days where investors are looking for fallen angels, healthcare helps fill that equation today," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "What was a drag over the past few days is now the leader."
The Dow Jones industrial average .DJI rose 122.1 points, or 0.73 percent, to 16,912.29, the S&P 500 .SPX gained 15.91 points, or 0.8 percent, to 1,995.83 and the Nasdaq Composite .IXIC added 42.79 points, or 0.9 percent, to 4,791.15.
Energy and materials shares also rose, extending recent gains. On the downside, shares of Adobe fell 5.3 percent to $80.65 while Yum Brands slumped 18.8 percent to $67.71.
Analysts have been cutting estimates for U.S. third-quarter earnings since the start of the quarter, and results now are forecast to have declined 4.4 percent from a year earlier, Thomson Reuters data showed.
But even as Citi strategists have warned that analyst earnings forecasts are too optimistic, they have backed the view that the bull market has yet to die, predicting global equities will rise 20 percent through the end of 2016. The market is "already pricing in" a gloomier scenario, they argued.
The pan-European FTSEurofirst 300 .FTEU3 closed up 0.1 percent, while MSCI's all-country world stock index .MIWD00000PUS was up 1 percent.
Brent LCOc1, the global crude oil benchmark, settled a volatile session down 59 cents at $51.33 a barrel. U.S. crude CLc1 slid 72 cents to settle at $47.81.
Brent and WTI had gained around 8 percent, or about $4, over the past three days, breaking above a month-long trading range.
U.S. Treasuries prices fell, with benchmark yields hitting their highest in a week as a recovery in global stock markets and bets on more stimulus from foreign central banks pushed investors away from bonds.
Benchmark 10-year Treasuries US10YT=RR were down 10/32 in price to yield 2.070 percent, up 3.5 basis points from late Tuesday. Earlier, the 10-year yield hit a one-week high of 2.086 percent.
(Additional reporting by Noel Randewich, Tanya Agrawal, Sam Forgione and Lionel Laurent; Editing by Leslie Adler and James Dalgleish)