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Microsoft is offering $31 a share per share for Yahoo, or a total of $44.6 billion, representing a 62 percent premium to Yahoo's closing stock price Thursday. Merger and acquisition news, which has been in short supply for months, tends to energize the stock market.
Investors are also waiting for the Labor Department's January employment report to give them clues about the state of the economy. They should be relieved if jobs generation and the employment rate show strength.
A number of economists have voiced concern that the U.S. already has entered a recession. But a strong employment report would suggest that enough workers are employed to keep consumer spending at healthy levels and keep the economy churning.
Economists surveyed by Thomson/IFR are forecasting that 70,000 jobs were created in January. That would be a sharp improvement over just 18,000 jobs in December. Yet before the mortgage crisis that began last summer, jobs growth of 100,000 was considered the norm. The report is due at 8:30 a.m. Eastern time before the opening of trade.
The futures contract for the Dow Jones industrial average advanced 147 points, or 1.2 percent, to 12,761. Futures contracts for the Standard & Poor's 500 index rose 15 points, or 1.2 percent, to 1,394 and the Nasdaq 100 contract gained 26.2 points, or 1.4 percent, to 1,874.
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 The expected gains in the stock market put pressure on Treasurys as the two markets often trade in opposite directions. The benchmark 10-year note's yield was 3.64 percent, up 3.59 percent late Thursday.
On Thursday, Wall Street ended its worst January since 1990 with a huge advance, after investors set aside worries about bond insurers and grew more optimistic that the Federal Reserve's interest rate cuts will indeed help lift the economy.
In addition to the jobs report, investors also are eager to see the Institute for Supply Management's January manufacturing survey at 10 a.m. Eastern. The December survey raised alarms because it was the first one to indicate a shrinking manufacturing sector since January 2007.
The survey's headline index is expected to read 48.3, according to Thomson/IFR. That would mark an improvement over 47.7 in December, but all readings under 50 indicate contraction.
Other technology stocks also should be in view. Google Inc. failed to meet analysts' expectations for its earnings and Motorola Inc. said it is mulling a sale of its handset division.
In overseas trade, Japan's Nikkei closed down 0.70 percent. In Europe, London's FTSE rose 1.34 percent, Frankfurt's DAX gained 1.16 percent and Paris' CAC 40 rallied 1.66 percent.
[Associated Press; By LESLIE WINES]
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