Among earnings, home improvement retailer Lowe's posted earnings and revenue that topped Wall Street expectations, as sales benefited from rebuilding after super storm Sandy. However, the company's outlook disappointed analysts.
Hertz posted a quarterly loss, hurt by to costs related to its acquisition of rival Dollar Thrifty, but shares still rallied after the car rental company's adjusted earnings still topped expectations. In addition, the firm said it expects to see strong results for 2013 on higher pricing.
Traders also will be watching Microsoft after Stifel Nicolaus suggested the computer giant should split into two firms, with one focused on software and the other on devices.
Shares in both Asia and Europe were boosted on reports that Japan's government is likely to nominate Haruhiko Kuroda, an advocate of aggressive monetary easing, as the next Bank of Japan chief. Investors expect that Kuroda, currently the president of the Asian Development Bank, will push for further unorthodox monetary policy measures to achieve the 2 percent inflation target adopted last month.
Moody's Investors Service downgraded U.K.'s triple-A credit rating on Friday due to weakness in the country's medium-term growth outlook and an increasing debt burden. Britain's finance minister, George Osborne, said the downgrade would not change his austerity program, which has been blamed in some quarters for the country's weak growth outlook. (Read More: Is the UK the New 'Problem Child' of Europe?)
Meanwhile, Italians headed to the polls on Sunday. Despite a closely-fought race, analysts at Citi forecast only a 7 percent chance of an inconclusive result or "hung parliament," an outcome which could cause instability in the markets. (Read More: The Tycoon, Professor and Clown in Italy's Election)
Meanwhile, Congress reconvenes to decide on the $85 billion in automatic spending cuts due to take effect on March 1. Wall Street analysts say it is increasingly unlikely that Democrats and Republicans will agree to a deal on the sequestration issue this week. (CNBC Explains: Sequester)
"A major effort to short-circuit the cuts does not seem in train for the coming week," wrote Michael Moran, chief economist at Daiwa Capital Markets America.
However, Moran said commentators were exaggerating the negative impact of the sequester, with potential cuts to big-ticket items being spread over several years, rather than undertaken immediately.
The U.S. Treasury is set to auction $35 billion of 2-year notes with the results of the auction available shortly after 1pm ET.
Federal Reserve Chairman Ben Bernanke is expected to deliver his semiannual testimony on monetary policy to the Senate Banking Committee on Tuesday, followed by an appearance before the House Financial Services Committee on Wednesday. Traders say leaked reports that Bernanke has downplayed worries that quantitative easing is spawning asset bubbles helped lift markets last week.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
MONDAY: Dallas Fed mfg survey, 2-yr note auction, Fed's Lockhart speaks, USDA food prices outlook; Earnings from Caesar's Entertainment, Autodesk
TUESDAY: FHFA housing price index, S&P Case-Shiller home price index, new home sales, Richmond Fed manufacturing index, Ben Bernanke speaks, 5-yr note auction, JPMorgan Chase investor day; Earnings from Home Depot, AutoZone, Macy's, Saks, Priceline.com, TiVo
WEDNESDAY: Weekly mortgage applications, durable goods orders, Ben Bernake speaks, pending home sales, oil inventories, 7-yr note auction, Apple shareholders mtg, Coinstar shareholders mtg; Earnings from Target, Dollar Tree, TJX, Groupon, JCPenney, Limited Brands, Monster Beverage
THURSDAY: GDP, jobless claims, Chicago PMI, natural gas inventories, Fed's Raskin speaks, Farm Prices, Fed's Fisher speaks, Fed's Evans speaks, Oppenheimer investor mtg; Earnings from Best Buy, Kohl's, Sears, Barnes & Noble, Gap, Salesforce.com
FRIDAY: Personal income & outlays, PMI manufacturing index, consumer sentiment, ISM mfg index, construction spending, Ben Bernake speaks, auto sales; Earnings from Foster Wheeler
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