The Dow Jones industrial average jumped 70.03 to 10,311.05 as the market opened, and the Nasdaq was up 62.42 to 2,034.46.
In economic news, the Labor Department's weekly report on initial jobless claims indicated the jobs market was worse than expected. Claims were up 42,000 to 445,000--the highest level in 9 years. Economists expected the number of claims to decline to 390,000 from 399,000 the week before. Most blamed the unexpected increase on annual plant retoolings in the auto industry.
Here are the key stocks to watch for Tuesday:
Microsoft announced Wednesday that it would report better-than-expected sales for the fourth quarter. The software giant also said earnings excluding one-time items would hit its previous target. First Call's consensus estimate excluding charges is for earnings of 42 cents a share.
Microsoft also said it would take a loss of $2.6 billion related to a plunge in the value of its stock holdings.
Motorola managed to beat lowered estimates for its second quarter though it reported a steep loss compared with last year's results. The mobile phone maker's loss was 11 cents a share, compared with the 12 cent per-share loss expected according to First Call. But the results don't compare favorably with earnings of $551 million, or 25 cents a share, in the same period last year.
Yahoo also topped expectations with its second-quarter results. The Internet bellwether reported pro forma net income of a penny per share, compared with 11 cents per share in the same period a year ago. First Call expected the company to break even for the quarter.
Revenue for the quarter was down from the previous year's--at $182.2 million, compared with $272.9 million a year ago--and analysts foresaw no end to the advertising slump that curbed the company's revenue.
Reuters contributed to this report.