Wall Street rebounds on earnings

United States stocks closed higher as Microsoft made a long-awaited announcement on a new chief executive and a handful of corporate results topped market expectations.

Investors were also seen bargain hunting, swooping on beaten down stocks in the wake of a 5% fall in the broad S&P 500 index over the past fortnight.

At the closing bell, the Dow Jones Industrial Average had added 72.44 points, or 0.47%, to 15,445.24.

The broad-based S&P 500 picked up 13.31 points, or 0.76%, at 1,755.20, while the tech-heavy Nasdaq Composite Index gained 34.56 points, or 0.86%, at 4,031.52.

The gains on markets, which at one point hit one% on the S&P 500 and Nasdaq, came after losses of two% Monday.

Dow component Microsoft said that founder Bill Gates was stepping down as chairman to become a technology adviser and Satya Nadella, head of its cloud-computing division, would succeed Steve Ballmer as chief executive. Microsoft shares rose 0.5%.

Investors were also cheered by strong reports from retailer Michael Kors Holdings and restaurant chain Yum Brands.

Michael Kors surged 17.7% after net income of $US1.11 per share easily topped estimates of 86 US cents. The company reported a 28% rise in same-store sales, outperforming most other retailers by a wide margin.

Yum Brands rose 8.5%. The owner of KFC, Pizza Hut and other restaurant chains projected at least 20% earnings growth in 2014 after difficulties over its poultry supply in China marred results in 2013.

Struggling department-store chain JC Penney fell over 10% despite announcing that comparable store sales in the fourth quarter rose 2.0%, according to preliminary data, the first increase since the second quarter of 2011.

Grain trader and processor Archer Daniels Midland saw its shares fall close to 1% on news fourth quarter earnings had sunk 27%. Costs relating to the group's failed bid for control of Australia's GrainCorp were seen as the major contributor to the drop.

Also making news was comments from Federal Reserve Bank of Richmond President Jeffrey Lacker that indicated the Fed would continue to pare back its $US65 billion bond-buying program over coming months.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.62% from 2.58% Monday, while the 30-year increased to 3.57% from 3.54%. Bond prices and yields move inversely.

The lift in stocks comes ahead of an eagerly waited labour market update in the US at the end of the week. A weak jobs number will likely see recent market falls exacerbated, while a positive read should provide impetus to the latest rebound.