Verified answer

Yahoo denies there are any problems with emoticons, bold, italic, etc. and encourages users to try each of the steps outlined in this Yahoo Help article:

Fixing common problems in Yahoo Mail -- http://help.yahoo.com/kb/index?page=content&id=SLN...

Other users have said this primarily affects Internet Explorer 11. You can try switching to a different web browser such as Chrome or Firefox:

Web browsers supported by Yahoo -- http://help.yahoo.com/kb/index?page=content&id=SLN...

Switch to a previous version of IE: Open Internet Explorer and press F12, click on Browser mode and select Internet Explorer 9.

Or switch to Compatibility Mode:

To access the Compatibility Mode Settings, press the Alt key, or right click anywhere on the top bar of your browser, then click Menu. After you do either of those, click Tools and look for Compatibility Mode Settings. Manually enter the URL for the site you are trying to access to see if this resolves the issue.