Financials gained after widely-followed bank analyst Meredith Whitney turned bullish the sector. Whitney also upgraded Bank of America, Citigroup and Discover Financial to "buy" from "hold."
Apple rallied after the iPhone maker was reiterated with an "outperform" rating at Cowen. Separately, rival Samsung says it will withdraw European injunction requests against Apple.
Knight Capital rallied as the company is getting closer to a sale. The market maker is expected to enter into exclusive talks with either Getco or Virtu Financial on the sale of the company, according to sources.
Arbitron surged after Nielsen said it will acquire the radio station ratings provider in a deal worth $1.26 billion.
Oracle is scheduled to post earnings after the closing bell.
On the economic front, home builder sentiment index climbed for an eighth-straight month, according to the National Association of Home Builders. Homebuilders including Beazer, Pulte and Toll Brothers rallied.
"Housing is definitely getting better, as a lot of the indicators have shown," said Fox. "Homebuilders have also reported forward orders, which have been going up for a number of months."
The U.S. current account deficit fell more than expected in the third quarter to $107.5 billion, the lowest in nearly two years, according to the Commerce Department.
Treasury prices remained lower after the government auctioned $35 billion in 5-year notes at a high yield of 0.769 percent. The bid-to-cover was 2.72.