"So long as inflation remains at around these levels, it will certainly support the mutiples that we have," said Tim Dreiling, regional investment director for The Private Client Reserve of US Bank. "We'll watch inflation to see if that unexpectedly rises and could cause some concerns about earnings compression."
After a lukewarm December jobs report, investors will look for fresh signs of pickup in inflation from the monthly consumer price data due on Friday. At 12:29 am ET (1729 GMT), the Dow Jones Industrial Average was up 113.05 points, or 0.45 percent, at 25,396.05 and the S&P 500 was up 7.16 points, or 0.26 percent, at 2,754.87.
The Nasdaq Composite was up 11.28 points, or 0.16 percent, at 7,168.66. Fourth quarter earnings season is set to begin on Friday with big banks and will give investors more details on the impact of tax cuts on companies' performance. Earnings for S&P 500 companies are expected to rise 11.8 percent in the fourth quarter, compared with an 8 percent increase a year earlier, according to Thomson Reuters I/B/E/S.