Stocks higher amid Greece hopes, data; financials jump 1%

U.S. stocks traded higher on Wednesday, as investors eyed better-than-expected data and the latest developments between Greece and its creditors. ( Tweet This )

"Investors should have higher conviction we are back to trend (on economic growth)," said David Lefkowitz, Senior Equity Strategist at UBS. "I think it's mostly about Greece (and) a lot of volatility around what's happening in Europe."

Investors remained optimistic of a deal for Greece despite Prime Minister Alexis Tsipras' statements the country will go ahead with the referendum on Sunday and that it is not a determinant of whether or not Greece remains in the euro zone, Reuters reported.

The Dow Jones industrial average traded about 110 points higher, off a more than 170-point rise in the open. The Nasdaq Composite also briefly jumped 1 percent as biotechs and Apple advanced.

Dow futures leaped more than 160 points on morning news that Tsipras accepted lenders' conditions in a two-page letter originally sent to the heads of the European Commission that requested only minor revisions to their suggestions on pensions and tax reforms.

"The reason futures (were) strong this morning is the idea we might have a resolution on Greece that keeps it in the euro zone," said James Meyer, chief investment officer at Tower Bridge Advisors. "ADP confirms what we saw all along and I think tomorrow's jobs report is strong."

Financials led advancers in the S&P 500, gaining more than 1.2 percent as yields climbed.

It's "obviously enthusiasm that a deal will be struck (in Greece). I think probably more important (is) that we had some really good economic data today," said Peter Cardillo, chief market economist at Rockwell Global Capital. "Despite a rise in yields and the dollar is stronger, the first trading day of the second half is probably going to indicate the market is going to do well in the second half."

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Treasury yields held higher, with the 10-year yield near 2.41 percent. The 2-year note yield was 0.68 percent. German 10-year bund yields gained to 0.83 percent.

The U.S. dollar advanced against major world currencies, with the euro at $1.109. The yen trimmed losses against the dollar at 123 yen.

"In terms of the euro I think the euro is going to be pretty much sidelined. It doesn't look like anything significant is going to happen between now and the referendum," said Jason Leinwand, managing director of Riverside Risk Advisors. "I think we're going to go back at least until the fifth to a sort of fundamental focus (that) the U.S. economy is outperforming."

"I think the markets are going to discount everything that happened on Monday," he said. "The market understands it's going to be fairly significant turmoil if (Greece leaves the euro zone)."

Stocks closed mildly higher on Tuesday, with the S&P 500 eking out its narrowest gain on record for the first half of the year. The major indices plunged nearly 2 percent or more on Monday for their worst day of the year as news of a July 5 referendum in Greece negatively surprised investors.

Read MoreGreece live blog: Tsipras suggests Athens will blink

European equities surged on renewed hopes of a Greece deal, with the DAX up more than 2 percent. The Athens stock exchange remained closed for the third day in a row.

The Eurogroup of regional finance ministers were scheduled to hold a conference call Wednesday on Greece's latest proposal, but will not likely make a decision until after Sunday's planned referendum, officials told Reuters.

Greece defaulted on a 1.5 billion euro ($1.7 billion) loan that was due to the International Monetary Fund Tuesday night.

Asian equities outside of mainland China gained amid news of Greek default, but the Shanghai Composite plunged more than 5 percent.

Investors also kept an eye on Puerto Rico, which has indicated difficulty repaying its debt of $72 billion. On Wednesday, the island's electric power authority, or PREPA, reached a deal with its creditors to make its $416 million payment.

In the United States, Wednesday kicks off two days of data reports before the July 4 holiday.

"The stronger U.S. data will distract us from these issues (in Greece)," said Jack Ablin, chief investment officer at BMO Private Bank. He noted the "U.S. is pretty isolated" from the situation overseas.