Apple recovered earlier losses, rebounding from a 4 percent last week. Most recently, Citi downgraded its rating on the company to "neutral" from "buy." Meanwhile, BMO cut its price target on the company to $670 from $730 and Canaccord Genuity lowered its price target to $750 from $800. The price target cuts come even as Apple announced it sold two million iPhone 5s over its launch weekend in China.
Bank of America and Citigroup gained after Raymond James raises its price target on the bank to $14 from $12 and to $52 from $44, respectively.
Airlines including Delta, US Airways and United Continental climbed after Dahlman Rose upgraded its industry outlook to "bullish" from "cautious," citing higher passenger revenues in 2013.
AIG gained after the insurance giant said it may raise as much as $6.5 billion from the sale of its remaining stake in AIA.
Enzon Pharmaceuticals soared after the biotech firm said it retained Lazard as its financial adviser to review the company's options including a possible sale of the company or its corporate assets.
Clearwire tumbled after the wireless communications company agreed to sell nearly half of the company to Sprint for a sweetened $2.2 billion. Sprint currently owns slightly more than half of Clearwire.
German holding company Joh. A. Benckiser said it will acquire Caribou Coffee in a deal worth nearly $325 million. Caribou surged nearly 30 percent after being briefly halted.
On the economic front, a gauge of manufacturing in the New York state fell to minus 8.1 in December, falling for the fifth-straight month, according to the New York Federal Reserve. Economists polled by Reuters had expected a reading of minus 1.0.
Treasurys held losses after the government auctioned $35 billion in 2-year notes at a high yield of 0.245 percent. The bid-to-cover ratio was 3.59.
Oracle, FedEx, Nike and Research In Motion are among notable companies scheduled to post earnings throughout the week.
"If we look at industrials, they are expected to be our biggest laggard for the fourth quarter—down about 2.2 percent," said Christine Short, senior manager at S&P Capital IQ. "FedEx said it predicts a weak fourth quarter and even a weak first half of 2013."
In Europe, German Chancellor Angela Merkel warned that Europe's generous welfare system risked hurting competitiveness. In an interview with the Financial Times, she reiterated her determination to see European countries commit to structural reforms.
Meanwhile, Finland's minister for European affairs, Alexander Stubb, said the euro zone may yet need to do more to bail out indebted member states.
"We are always trying to end the bailout policy in all its forms," Stubb said in an interview with public broadcaster YLE on Saturday. However, he added: "If the situation calls for it, there might be countries that need help in some form." (Read More: Draghi—New ECB Bank Oversight Will Revive Confidence)