The Nasdaq Composite Index rose $36.16, or 1.4 percent to 25775.15, while the Philadelphia Semiconductor Index rose 2 percent, or $8.01 to $410.38 by mid-day.

Leading the sector was video-game publisher Activision, whose shares jumped more than 12% after the company announced higher third-quarter and fiscal-year earnings on sales of the Guitar Hero III video game.

Virtualization provider, Vmware, jumped $6.07, or 8.5 percent, while the largest online retaile, Amazon, rose over 3 percent on strong holiday sales.

The semiconductor leader, Intel, also saw its stock ahead more than 2 percent. Smaller rival AMD, however, saw its shares drop more than 2% after an analyst downgraded the company from buy to neutral on concerns about the firm's near-term outlook.

Tuesday's gains followed Monday's declines as the market continued to reel from the crisis in the financial-services sector.

Intel