"The good news is that earnings expectations have been ratcheted down over the past few weeks," said Todd Salamone, director of research at Schaeffer's Investment Research. "Lowered expectations are good because that's a lower hurdle to jump over…and a lot depends on the outlook."
Dow component Alcoa posted earnings and revenue that topped Wall Street expectations, adding it remains optimistic that global demand for aluminum will grow 7 percent this year. Shares of the aluminum maker initially opened higher, but quickly reversed their gains. Alcoa unofficially marks the start to each earnings season.
Meanwhile, Intuitive Surgical tumbled sharply to lead the S&P 500 laggards after the medical devices maker said it expects second-quarter revenue below analysts' expectations. In addition, at least three brokerages slashed their ratings and price targets on the company. Other clinical lab services companies and medical equipment manufacturers were also sharply lower including Quest Diagnostics, Varian Medical Systems and Laboratory Corp.
As of Friday, 122 S&P 500 companies had made earnings pre-announcements, and the ratio of negative-to-positive ones was 6.5-to-one, according to Reuters. That is the biggest percent of negative readings since 2001.
U.S. regulators proposed a plan that would force the country's largest financials to hold twice as much equity capital than required by the global Basel III bank capital standards.The eight largest banks would be subject to a leverage ratio of 6 percent. Bank stocks initially turned lower following the news, but regained their footing along with the broader market.
JPMorgan and Wells Fargo are scheduled to report earnings later this week.
(Read More: Firms Set to Beat Lowered Bar for Earnings Season)
Homebuilders including DR Horton, Lennar and KBHome were up sharply following news that foreclosures in May were down 27 percent from a year ago.
Kroger advanced after the country's largest supermarket chain said it will acquire grocery chain Harris Teeter for $2.5 billion in cash.
Barnes & Noble announced its CEO William Lynch has resigned effective immediately, but did not provide a specific reason for his departure. The company had originally hired him in to improve the struggling Nook business.