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The Dow charged higher by more than 100 points on Tuesday amid news Italy's prime minister plans to resign his post.

Today's Markets

As of 3:42 p.m. ET, the Dow Jones Industrial Average jumped 103 points, or 0.85%, to 12,171, the S&P 500 gained 14.6 points, or 1.2%, to 1,275 and the Nasdaq Composite climbed 30.3 points, or 1.1%, to 2,726.

All eyes have once again turned to the euro zone, where leaders are racing to stem the sovereign debt crisis that is now threatening Italy, the currency bloc's third-largest economy.

Italian Prime Minister Silvio Berlusconi revealed he would resign following the passage of a 2012 budget bill after losing his majority support earlier in the day on Tuesday. The move was seen as positive by the markets, which shed earlier losses, amid hopes the ouster of the premier would open to the door to reforms necessary to keep the county's debt from spiraling out of control.

Even with Berlusconi's resignation, the country is facing a tough situation.

Italy, which has a 120% debt to economic output level, has seen the yields on its benchmark 10-year note spike to above 6.8% -- a fresh euro-era high -- as worries have mounted it may need a rescue like its peers, such as Greece, have recently required.

The country's borrowing costs are "clearly unsustainable," according to economists at Barclays Capital. The higher the yield on its debt, the more it costs a country to borrow in the private markets.  With Italy's high level of public debt, such a high interest rate make it extremely difficult, if not impossible, for the country to cut its debt without support, analysts say.

European blue chips held on to sizeable gains afternoon trading there, having closed before Berlusconi resigned, as a result of strong corporate earnings from big-name companies, like Vodafone (NYSE:VOD) and Intercontinental Hotels (NYSE:IHG), according to Chris Beauchamp, an analyst at London-based trading firm IG Index.  The euro rose 0.11% to $1.379.

On the U.S. front, (NASDAQ:PCLN), the biggest American travel website by market capitalization, saw its earnings more than double in the third quarter from the same period last year.

Dynegy's (NYSE:DYN) holding company filed for Chapter 11 bankruptcy protection, while its parent company did not.  The  method the power generation company used to file may protect shareholders in the parent company, while causing the bondholders to take hefty losses, which is unusual, the Wall Street Journal reports.

There are no major economic reports on tap for Tuesday.

Energy markets were mixed.  The benchmark New York crude oil contract climbed 51 cents, or 0.52%, to $96.03 a barrel.  Wholesale RBOB gasoline slid 3 cents, or 1.1%, to $2.70 a gallon.

Gold nudged higher by $2.20, or 0.1%, to $1,793 a troy ounce.  The benchmark 10-year Treasury note yields 2.015% from 2.038%.

Foreign Markets

European blue chips gained 1.4%, the English FTSE 100 jumped 1% to 5,566 and the German DAX rallied 0.57% to 5,963.

In Asia, the Japanese Nikkei 225 fell 1.3% to 8,656 and the Chinese Hang Seng held steady at 19,678.