US stocks advanced in early trade on Tuesday, the first trading day of February, after Dow recorded its biggest January rally since 1997 in the previous month.

The S&P 500 Index gained 10.90 points, or 0.85 percent, to trade at 1,296.95 at 9:45 a.m. EDT. The Dow Jones Industrial Average gained 68.61 points, or 0.58 percent, to trade at 11,960.54. The Nasdaq Composite Index advanced 0.95 percent.

Investors digested a wave of earnings reports and await for the economic data including ISM manufacturing and construction spending.

ISM manufacturing for the month of January will be released at 10:00 am EST and is expected to show a slight deterioration in activity Economists are forecasting that ISM manufacturing index for the month of January will be 58.20 against 58.50 in the previous month.

On the corporate front, shares of BP Plc. (NYSE:BP) declined 1.26 percent to $46.86 as the company reported a full year loss due to the impact of last year's oil spill in the Gulf of Mexico.

Pfizer Inc. (NYSE:PFE) shares gained 3.07 percent after the company said its fourth-quarter profit rose to $2.89 billion or $0.36 per share from $767 million or $0.10 per share in the same quarter last year.

Archer Daniels Midland Co. (NYSE:ADM) shares surged 6.80 percent to $34.91 as its second quarter earnings rose to $732 million or $1.14 per share, up from $567 million or $0.88 per share in the same quarter last year.

Shares of Baidu, Inc. (BIDU) climbed 6.95 percent following its better-than-expected fourth quarter earnings. Adjusted profit was 1.19 billion Chinese yuan, up from 0.45 billion Chinese yuan last year. Adjusted earnings per share was 3.40 Chinese yuan or $0.52.

On Monday, U.S. stocks ended higher despite ongoing unrest in Egypt as investors took heart in the Suez Canal's continued operation and U.S. economic data that topped expectations.

The euro gained 0.48 percent to 1.3760 against the dollar and the yen gained 0.51 percent against the greenback.

Crude oil futures declined 0.37 percent to $91.85/barrel and gold futures advanced 0.07 percent.

European stock markets are currently trading higher with FTSE 100 up by 69.05 points, DAX30 up by 74.54 points and CAC 40 up by 40.43 points.