"News that Obama is set to nominate the dovish vice-chair Janet Yellen to the top job at the Fed has seen sentiment improve, based on the prospect of policy continuity," wrote Mike van Dulken, head of research at Accendo Markets, in his daily note to clients. "It's expected that rates will stay low for longer and policy will be accommodative."
An hour before the Yellen announcement, investors will get a look at the minutes of the Federal Reserve's most recent policy meeting. The document will be closely scrutinized for clues about the central bank's plans for its bond-buying program.
Earnings rolling in:Alcoa(AA) shares rose nearly 4% in premarket trading after the aluminum producer's earnings beat expectations.
Shares of Yum! Brands(YUM), meanwhile, plunged more than 7% after the operator of KFC, Taco Bell and Pizza Hut reported weak earnings and continued problems in its China division.