U.S. stocks advanced in early trade on Tuesday as upbeat earnings from Adobe Systems, and a couple of M&A deals buoyed sentiment. 

The S&P 500 Index advanced 4.78 points, or 0.28 percent, to trade at 1,251.78 at 9:50 a.m. EDT. The Dow Jones Industrial Average advanced 36.10 points, or 0.31 percent, to trade at 11,514.23. The Nasdaq Composite Index gained 0.45 percent.

Shares of Adobe gained 5.87 percent in early trading as the company reported better-than-expected fourth quarter earnings on late Monday on back of strong demand for software products. The company's fourth quarter adjusted profit was $285.7 million or 56 cents a share, up from $206.8 million or 39 cents a share last year. Revenue rose 33 percent to $1.01 billion.

Martek Biosciences Corp. soared 34.80 percent after the company said it agreed to be acquired by the Netherlands-based Royal DSM N.V. for $31.50 a share in cash or total consideration of $1.09 billion.

Identification cards maker LaserCard Corp shares climbed 39.21 percent after the company agreed to be bought out by lockmaker Assa Abloy for $80 million.

Jabil Circuit shares surged 6.06 percent after reporting better-than-expected first quarter results on late Monday.

Shares of Nike advanced 1 percent, Red Hat declined 0.79 percent and Cintas Corp advanced 0.55 percent ahead of quarterly earnings after the markets closes.

On Monday, US stocks finished essentially flat in listless pre-holiday trading amidst low volume and a dearth of economic data.

The euro advanced on Tuesday after China offered support to Europe's efforts to deal with the peripheral debt crisis and said Beijing will not cut down its holdings of European sovereign bonds. However, it pared earlier gains as Moody's said it could likely downgrade Portugal's rating.

The euro advanced 0.24 percent to 1.3162 against the dollar and the yen gained 0.17 percent against the greenback.

Crude oil futures declined 0.01 percent to $89.36/barrel and gold futures fell 0.05 percent.

European stock markets are currently trading higher with FTSE100 up by 53.12 points, DAX30 up by 57.91 points and CAC 40 up by 37.15 points