NEW YORK (CNN/Money) - Technology issues zipped higher as investors bet on a strong first-quarter earnings season following a spate of positive economic news.

The technology-fueled Nasdaq Composite Index rose 21.94 points, or 1.07 percent, to 2,079.11, according to preliminary reports.

Nortel Networks said the Securities and Exchange Commission launched a formal probe into the financial restatements that led to the suspension of its chief financial officer.

The Brampton, Ontario-based telecommunications equipment maker said it is cooperating with the U.S. securities regulator and "will continue to do so in order to bring the inquiry to a conclusion as promptly as possible."

Nortel (NT: Research, Estimates) shares slipped 3.7 percent to $6.06 on the New York Stock Exchange, where they were the most actively-traded stock.

Shares of Nextel Communications (NXTL: Research, Estimates) shot up nearly 6 percent to $25.80 on the Nasdaq after the wireless services firm announced it inked a deal to provide real-time NASCAR.com content to its subscribers.

NASCAR.com is a unit of Turner Sports Interactive, which like CNN/Money.com, is owned by Time Warner Inc. (TWX: Research, Estimates).

Sun Microsystems Inc. (SUNW: Research, Estimates) shares rallied roughly 20 percent earlier in the session on news it will receive $1.6 billion from software titan Microsoft to settle ongoing litigation before ending the day 2.4 percent lower to $4.94 on the Nasdaq.

Separately, the networking computer maker said John Loiacono will replace Jonathan Schwartz, who last week was named president and chief operating officer, as head of its software business.

Microsoft (MSFT: Research, Estimates) shares finished marginally higher at $25.95 on the Nasdaq.

IPIX (IPIX: Research, Estimates) shares surged 66.7 percent to $11.65 on the Nasdaq where they were one of the exchange's leading advancers after the developer of Internet video technology said it raised $5 million through a private stock purchase agreement with a group of unnamed institutional investors.

Chip stocks moved modestly higher, nudging the Philadelphia semiconductor index up 4.84 to 518.70.

Intel (INTC: Research, Estimates), the world's No. 1 chipmaker, rose 1.5 percent to $28.55 on the Nasdaq while Texas Instruments (TXN: Research, Estimates) sailed 1.7 percent higher to $30.94 on the New York Stock Exchange.

On the economic front, the domestic services sector sped past economists' expectations, offering more evidence that the economy's recovery is gaining traction.

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The Institute for Supply Management's non-manufacturing index surged to 65.8 in March, a 12th straight monthly increase, from 60.8 in February. Wall Street economists had forecast a rise to 61.5. A number above 50 indicates growth.

And on Friday, the Labor Department said payrolls outside the farm sector surged by 308,000 jobs in March, compared with a revised gain of 46,000 in February. The unemployment rate, which is generated by a separate survey, rose to 5.7 from 5.6 percent.

Economists, on average, had expected 123,000 new jobs and unemployment at 5.6 percent, according to Briefing.com.

It was the strongest gain in payrolls since a matching gain of 308,000 in April 2000.  

--from staff and wire reports