(Corrects Stephanie Link's title and location in graph seven to chief investment strategist and portfolio manager in Chicago from portfolio manager in New Jersey.)

* Microsoft says looking to buy TikTok's U.S. operations

* Investors hopeful as lawmakers gridlocked over relief deal

* McKesson, Tyson Foods rise on robust earnings updates

* Indexes up: Dow 0.86%, S&P 0.73%, Nasdaq 1.09%

By Sagarika Jaisinghani and Medha Singh

Aug 3 (Reuters) - Wall Street's main indexes rose on Monday as Microsoft's pursuit of TikTok's U.S. operations and a clutch of upbeat quarterly earnings reports lifted sentiment in the absence of a fiscal coronavirus relief deal.

Microsoft jumped 3.7% as it said it would push ahead with talks to acquire the U.S. operations of Chinese-owned TikTok after President Donald Trump reversed course on a planned ban of the short-video app.

Tech and healthcare led gains among the 11 S&P 500 sectors.

A rally in tech-related stocks and historic stimulus have lifted the S&P 500 to within 4% of its peak, but faltering macroeconomic data and a gridlock on more government stimulus have made investors cautious again.

After an extra $600-per-week in jobless benefits expired last week, Congressional Democrats and Trump administration officials faced increasing pressure to come to an agreement on new legislation.

White House adviser Peter Navarro said the Trump administration wanted an enhanced employment package passed in the next couple of days.

"Because we have an uneven economy, Congress has to do something," said Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors in Chicago.

"There are pocket of strengths and obviously the job market seems to be under pressure. I just hope they don't wait too long."

All eyes this week will be on the Labor Department's employment report on Friday that is expected to show far fewer jobs added in July after a record surge in June.

On Monday, ISM's survey of the manufacturing sector showed a pickup in July activity, mirroring upbeat factory activity data from Europe and China.

"While most agree that the bottom in economic activity is behind us ... the way forward is likely to be bumpy as several U.S. states re-impose lockdown measures," said Hussein Sayed, market strategist at FXTM.

"This probably won't show up in the data until the release of the August figures."

Wall Street's fear gauge has declined in the past few weeks to hover near the lows of coronavirus-fueled volatility since late February.

At 10:14 a.m. ET, the Dow Jones Industrial Average was up 227.69 points, or 0.86%, at 26,656.01, the S&P 500 was up 23.93 points, or 0.73%, at 3,295.05, and the Nasdaq Composite was up 117.01 points, or 1.09%, at 10,862.28.

With the U.S. corporate earnings season now past its half-way mark, a record number of companies have beaten dramatically lowered forecasts, but the second quarter is still set to be the low point for earnings this year.

Drug distributor McKesson Corp gained 5% after boosting its full-year earnings forecast, while Tyson Foods Inc rose 2.2% on topping quarterly profit estimates.

Clorox Co slipped 2.0% even as it beat quarterly sales and profit estimates.

After a tech-heavy week of earnings, investors are gearing up for reports from Walt Disney Co, T-Mobile US , Activision and American International Group .

Advancing issues outnumbered decliners 1.64-to-1 on the NYSE and 1.89-to-1 on the Nasdaq.

The S&P index recorded 31 new 52-week highs and no new low, while the Nasdaq recorded 106 new highs and 10 new lows. (Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; Editing by Uttaresh.V and Anil D'Silva)