(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 0.10%, S&P 500 0.58%, Nasdaq 1.11%

(Updates after markets open)

By Shashwat Chauhan and Sukriti Gupta

Feb 4 (Reuters) -

The S&P 500 and the Nasdaq gained on Tuesday as megacap

stocks stabilized despite ongoing market volatility following

China's counter tariffs in response to new U.S. trade

restrictions.

Minutes after U.S. President Donald Trump's 10% tariff on

Chinese goods kicked in at 12:01 a.m. ET (0501 GMT), China's

finance ministry announced levies on some U.S. imports,

effective Feb. 10.

Beijing's limited reply to Trump's imposition underscored

its attempts to engage the U.S. president in talks and avert an

outright trade war between the world's two largest economies.

"The tariff gun is clearly loaded... we don't know if it

eventually is going to fire, (but) we now have some time in

between the announcement and the implementation," said Art

Hogan, chief market strategist at B. Riley Wealth.

"Markets are going to take the pause and try to price in

the uncertainty."

Alphabet rose 1.8% ahead of its quarterly

results, which are due after markets close, while Nvidia ( NVDA )

advanced 2.8%.

At 10:21 a.m. ET, the Dow Jones Industrial Average

rose 46.08 points, or 0.10%, to 44,467.99, the S&P 500

gained 34.50 points, or 0.58%, to 6,029.07 and the Nasdaq

Composite gained 214.68 points, or 1.11%, to 19,606.63.

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

stocks leading the gains with a 1.7% rise.

Biotechnology firm Illumina ( ILMN ) dropped 4.3%, while PVH

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

Klein, shed 0.8% after China placed the companies in its

"unreliable entity list".

Trump had also imposed a 25% tariff on goods from Mexico and

Canada over the weekend, but agreed to a 30-day pause in the

levies on Monday, in return for border and crime concessions

from both countries.

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.

Comments from Fed leaders including Atlanta's Raphael Bostic

are expected through the day.

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 1.8%

after it forecast annual profit below expectations and missed

quarterly revenue estimates.

Merck ( MRK ) dropped 9.9% after the drugmaker said it would

pause shipments of Gardasil to China through at least the

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

expected to hurt the company's 2025 revenues.

Palantir ( PLTR ) jumped 25.8% after the data analytics

company forecast first-quarter and annual revenue above Wall

Street estimates.

PayPal ( PYPL ) fell 9.5% after the digital payments

giant's operating margin

shrank

in the fourth quarter.

Marathon Petroleum ( MPC ) rose 4.4% after

beating

fourth-quarter profit estimates.

Advancing issues outnumbered decliners by a 2.46-to-1

ratio on the NYSE, and by a 2.19-to-1 ratio on the Nasdaq.

The S&P 500 posted 13 new 52-week highs and 14 new lows,

while the Nasdaq Composite recorded 34 new highs and 68 new

lows.