"Any kind of meaningful positive news out of Washington may give us a relief rally," wrote Elliot Spar, market strategist at Stifel Nicolaus. "However, there are numerous levels of upside resistance which were previously support so it will be a tough climb."
Stocks tumbled more than 1 percent in the previous session, with the Dow closing at its worst level in nearly five months, following President Barack Obama's press conference on the "fiscal cliff," worries over the global economy and amid geopolitical tension in the Middle East.
"The predominant factor is still the fiscal cliff—that's what bothered the market yesterday during the press conference when President Obama seemed not ready to compromise, but rather obdurate about what he wanted to do with the tax increase," said Art Cashin, director of floor operations at UBS Financial Services. (Read More: Bartiromo—'Fiscal Cliff' Deal? Don't Count on It)
European shares finished in the red again after reports showed the euro zone slipped into its second recession since 2009 in the third quarter.
Meanwhile, Brent crude jumped near $111 a barrel as ongoing violence in the Gaza Strip prompted fears over an oil supply disruption in the Middle East.
Apple continued to decline, hitting a six-month low. The tech giant's stock is down about 25 percent from its all time high of $705 a share.
Among earnings, Wal-Mart reported earnings that exceeded estimates, but revenue fell short of forecasts. Meanwhile, S&P Capital IQ lowered its target price on the big-box retailer to $80 from $83.
Rival Target rose after the retailer posted quarterly results that edged past expectations.
Dell and Gap are expected to post earnings after the closing bell.
McDonald's announced that Jan Fields, president of its U.S. business, will leave the fast-food chain. The departure comes a week after the company reported its first monthly sales drop in nearly a decade.
United Continental edged lower after United Airlines briefly suffered its third major computer outage since June. The airline company said it has resolved the issue.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
On Tap This Week:
THURSDAY: Fed bank of Chicago annual conf.; Earnings from Gap, Dell , Autodesk, Marvell Tech
FRIDAY: Treasury international capital, industrial production, e-commerce retail sales; Earnings from Foot Locker, JM Smucker, Ann
More From CNBC.com: