The U.S. economy grew at a meager 0.1 percent annual rate in the fourth-quarter, according to the Commerce Department. Economists polled by Reuters expected a gain of 0.5 percent. The growth rate was the slowest since the first quarter of 2011.
Meanwhile, weekly jobless claims dropped 22,000 to a seasonally adjusted 344,000, according to the Labor Department. Economists expected a reading of 360,000, according to a Reuters survey, down from 362,000 in the previous week.
Major averages soared over the past two sessions, with the S&P jumping back above 1,500 and the Dow within 100 points of hitting its all-time closing high.
Among earnings, Sears gained after the retailer posted quarterly earnings and revenue that exceeded Wall Street expectations. Meanwhile, Kohl's declined after the mid-tier department store chain posted lower-than-expected earnings and forecast full-year profit that missed Wall Street estimates. The company also said it expects same-store sales to be between flat to up 2 percent this year.
JCPenney plunged after the retailer posted a much wider-than-expected fourth-quarter loss and revenue that fell short of expectations.
Groupon plunged after the daily-deal website posted earnings that missed estimates and handed in current-quarter guidance that widely fell short of Wall Street projections. In addition, at least three brokerages slashed their rating on the company.
In his second day of testimony on Capitol Hill on Wednesday, Bernanke said loose monetary policy was boosting employment.
"We believe the monetary policies we have conducted have helped get stronger recovery and more jobs than we otherwise would have had," he said, according to Reuters.
Bernanke forecast it would take three more years for unemployment to decline to 6 percent, further diminishing concerns the Fed might tighten policy sooner than expected. Previously, Bernanke has said he will keep interest rates low until unemployment falls to around 6.5 percent.
U.S. gains may be capped however by uncertainty about whether a last-minute deal can be struck to avert the $85 billion of spending cuts, known as the "sequester", due to hit on Friday.
In his testimony, Bernanke warned Congress of the dangers of failing to reach an agreement on how to combat sequestration.
"I think there is some cost to the economy of these repeated, I won't say 'crises,' but these repeated episodes where Congress is unable to come to some agreement and therefore some automatic thing kicks in. I think that is on the whole not a good thing for confidence," Bernanke said on Wednesday, according to Reuters.
(Read More: Why You May Suffer From the 'Sequester Blahs')
Also on the economic front, the Chicago Purchasing Managers Index (PMI) of manufacturing activity is due at 9:45 am ET. Analysts polled by Reuters predict a reading of 54.3 for February, down from 55.6 last month. PMI index readings above 50 signal an increase or improvement on the prior month, while readings below 50 indicate a decrease.