On the economic front, weekly jobless claims fell 5,000 to a seasonally adjusted 330,000, dropping to its lowest level in nearly five years, according to the Labor Department . Analysts polled by Reuters had expected claims to rise to 355,000 last week.
"The Fed Chairman [Ben Bernanke] said he wants to see substantial gains in the labor market before they're going to take the foot off the pedal—so this isn't enough to bring us there yet, but this is not a bad number," said Jim Iuorio, director at TJM Institutional Services.
In December, the central bank pledged to keep interest rates low until employment falls below 6.5 percent and inflation tops 2.5 percent.
"We have stock market tailwinds in Asia with the fact that they're devaluing the yen and China is providing stimulus in addition to a decent PMI—so this is not bad," continued Iuorio. "The chart is not giving us a reason to sell the stock market yet either, except for the fact that it may be a little long in the tooth."
The Dow is up more than 5 percent so far this month, on pace for the best January performance since 1997 when the index rose 5.7 percent. The index is also within 3 percent of its all-time closing high of 14,164.53 points hit on October 9, 2007. (Read More: The Great Rotation: A Flight to Equities in 2013)
Among earnings, Apple tumbled in pre-market trade after the world's most valuable company by market cap posted revenue that fell short of estimates and iPhone sales that missed quarterly expectations. The tech giant's stock has plunged nearly 33 percent from its all-time high of $705 last September. At least 13 brokerages slashed their price target on the company. (Read More: Apple Earnings Hit Could Whack Tech Hard)
Meanwhile, Netflix skyrocketed after the movie-streaming site posted a profit of 13 cents a share, blowing past expectations for a loss. In addition, the company handed in current-quarter guidance that topped estimates.
Also on the economic front, Markit will release its flash estimate for U.S. Purchasing Manufacturers' Index (PMI) for January at 9.a.m. Economists polled by Reuters expect a repeat of December's reading of 54.0. (PMI index readings above 50.0 signal an increase or improvement on the prior month, while readings below 50.0 indicate a contraction.)
However, independent research firm Capital Economics forecast PMI to fall in January.
"The rise in Markit PMI to a seven-month high of 54.0 in December probably exaggerated the improvement in the manufacturing sector," said U.S. Economist Amna Asaf in a note from Capital Economics. "The Fed's latest Beige Book suggests that manufacturing activity in early January was mixed…The weak nature of the global economic recovery remains a drag on manufacturing activity. In addition, the ongoing uncertain political climate may have altered firms' willingness to boost activity, investment and hiring."
The Conference Board releases its leading economic indicators index for December at 10 a.m.. Economists polled by Reuters forecast a 0.3 percent rise, compared with a 0.2 percent fall in November.
In addition,the Energy Department will issue its weekly look at natural gas inventories at 10:30 a.m., and crude oil inventories at 11 a.m. on Thursday.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: PMI manufacturing index flash, leading indicators, oil inventories, Fed balance sheet/money supply; Earnings from AT&T, Microsoft, E-Trade, Juniper Networks, Starbucks
FRIDAY: New home sales, Geithner's last day as Treasury Secretary, House recess until Feb. 4; Earnings from P&G, Halliburton, Honeywell, Kimberly-Clark
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