(For a Reuters live blog on U.S., UK and European stock

markets, click/ or type LIVE/ in a news window.)

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PepsiCo ( PEP ) down after forecasting annual profit below

estimates

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Merck ( MRK ) falls on dour 2025 forecast

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Indexes up: Dow 0.08%, S&P 500 0.59%, Nasdaq 1.16%

(Updates with mid-session trading levels)

By Shashwat Chauhan and Sukriti Gupta

Feb 4 (Reuters) -

The S&P 500 climbed on Tuesday, aided by energy stocks,

while investors focused on upcoming talks between U.S. President

Donald Trump and his Chinese counterpart Xi Jinping after

Beijing imposed retaliatory tariffs.

Seven of the 11 S&P 500 sectors traded higher, with

energy stocks leading the gains with a 2% rise, paring

earlier losses.

Trump and Xi were set to talk later in the day, White

House trade adviser Peter Navarro said at a Politico Live event,

as new 10% tariffs on Chinese imports took effect, which China

countered with levies on U.S. goods.

Trump had said over the weekend that he would impose a 25%

tariff on goods from Mexico and Canada, but agreed to a 30-day

pause on Monday, in return for border and crime concessions from

both countries.

Megacaps also rose, aiding a recovery in indexes from a

tepid start to the session. Alphabet was up 1.6% ahead

of its quarterly results, which are due after markets close,

while Nvidia ( NVDA ) advanced 2.5%.

Palantir ( PLTR ) jumped 23.7% after the data analytics

company forecast first-quarter and annual revenue above Wall

Street estimates.

"The fundamentals of the market are still solid and

earnings growth is great, but every time the President (Trump)

speaks and says he's going to do something, the market reacts

drastically," said Paul Stanley, chief investment officer,

Granite Bay Wealth Management.

"Palantir ( PLTR ) just had a great earnings report, and

everybody reacts to those big public companies right now and

thinks that it's going to have the same impact on all other

companies."

At 11:55 a.m. ET, the Dow Jones Industrial Average

rose 36.97 points, or 0.08%, to 44,458.88, the S&P 500

gained 35.15 points, or 0.59%, to 6,029.72, and the

Nasdaq Composite gained 225.54 points, or 1.16%, to

19,617.84.

Biotechnology firm Illumina ( ILMN ) dropped 5.9%, while

PVH Corp ( PVH ), the holding company for brands including

Calvin Klein, shed 0.9% after China placed the companies in its

"unreliable entity list".

The last-minute change helped the three major U.S. stock

indexes pare some of the heavy losses suffered earlier on Monday

and closed trading well off session lows.

Three Federal Reserve officials warned on Monday that trade

tariffs carried inflation risks, with one arguing that

uncertainty over the outlook for prices called for slower

interest-rate cuts than otherwise.

A Labor Department report showed U.S. job openings stood

at 7.6 million in December, compared to an estimated 8 million,

according to economists polled by Reuters.

In earnings-driven moves, PepsiCo ( PEP ) fell 4.2%

after it forecast annual profit below expectations and missed

quarterly revenue estimates.

Merck ( MRK ) dropped 10.7% after the drugmaker said it

would pause shipments of Gardasil to China through at least

mid-year, as continued weak demand for the HPV vaccine there is

expected to hurt the company's 2025 revenues.

PayPal ( PYPL ) fell 10.1% after the digital payments

giant's operating margin

shrank

in the fourth quarter.

Advancing issues outnumbered decliners by a 2.74-to-1

ratio on the NYSE, and by a 2.16-to-1 ratio on the Nasdaq.

The S&P 500 posted 21 new 52-week highs and 15 new lows,

while the Nasdaq Composite recorded 45 new highs and 88 new

lows.