Investor sentiment has remained favorable due to potential Fed interest rate cuts this week and a potential federal fiscal stimulus package. In earnings news, Cardinal Health closed higher after reporting profits above consensus expectations. Zimmer Holdings jumped after strong sales of artificial hips/knees and dental implants helped boost fourth-quarter earnings.

Printer manufacturer Lexmark soared after significantly beating analysts' expectations. Concerns surrounding the U.S. consumer caused an analyst downgrade of Walt Disney, causing the shares to fall.

Shares of Countrywide Financial closed higher despite reporting disappointing earnings. Support for the stock appears to be the Bank of America's continued interest in purchasing Countrywide. - UBS