The minutes showed the Fed sees increased economic growth and an uptick in inflation as justification to continue to raise interest rates gradually . The central bank said it believes inflation can reach its 2 percent target, but does not think inflation is getting out of hand.

"The made it clear that you're going to see more rate hikes," said Quincy Krosby, chief market strategist at Prudential Financial. "The question for the market now is how many."

The Dow Jones industrial average closed 166.97 points lower at 24,797.78 after rising 303.24 points earlier in the session. The fell 0.6 percent to 2,701.33, with real estate sliding nearly 2 percent. The Nasdaq composite closed 0.2 percent lower at 7,218.23. The S&P 500 and Nasdaq had risen more than 1 percent each.

Stocks closed lower on Wednesday, erasing sharp gains, after interest rates reached fresh multiyear highs following the release of the latest Federal Reserve minutes.

Stocks initially hit session highs after the minutes were released. Dave Lutz, head of ETF trading at JonesTrading, said buy programs were triggered following the minutes' release as the stock market saw them as "a little more dovish" than expected.

Treasury yields and the U.S. dollar whipsawed following the news. The benchmark 10-year note yield initially fell from session highs after the release, but recovered to reach a fresh four-year high above 2.95 percent.

Stocks fell on Tuesday, with the Dow finishing more than 250 points in the red. The negativity on Wall Street came after shares of Walmart sank, and concerns over a rise in interest rates continued to dwell. The S&P 500 also snapped a six-day winning streak.

"Six-day win streaks have been a fine predictor of short-term future gains over the last five years," said Frank Cappelleri, executive director at Instinet. Before the current one, there were 12 others. … Of those twelve, the SPX was higher two weeks later 11 times (92%) with an average gain of nearly 1%."

"If the SPX has any plans of maintaining this pristine track record, it will have to hang onto a good chunk of last week's huge bounce back," he said. The S&P 500 jumped 4.3 percent last week, notching its biggest weekly gain since 2013.

In data news, the flash U.S. composite purchasing managers' index (PMI) rose to its highest level in more than two year, reaching 55.9, according to IHS Markit. Meanwhile, existing home sales fell for a second straight month in January.

Politics remained in the back of investors' minds as developments into Russia's alleged involvement in the 2016 U.S. presidential election persist. The son-in-law of a Russian oligarch Alex Van der Zwaan pleaded guilty on Tuesday to lying to federal officials about alleged links between Russia and Donald Trump's campaign.

In corporate news, Advance Auto Parts was the best-performing stock in the S&P 500, rising more than 8 percent after reporting better-than-expected earnings. The company said it is pleased with its performance given what it calls a difficult sales environment.

—CNBC's Dan Mangan, Peter Schacknow and Kevin Breuninger contributed to this report