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PepsiCo ( PEP ), Estee lauder fall after weak earnings forecasts

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Palantir ( PLTR ) jumps on upbeat revenue outlook

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Investors await Alphabet earnings post-close

(Updates at the close)

By Abigail Summerville and Sukriti Gupta

Feb 4 (Reuters) - The three major stock indexes closed

higher on Tuesday, aided by energy stocks, while investors saw

reason for optimism for a trade breakthrough between the U.S.

and China after President Donald Trump delayed tariffs for

Canada and Mexico.

New 10% U.S. tariffs on Chinese imports took effect on

Tuesday, which China countered with levies on U.S. goods. It was

unclear when the country's leaders would talk and Trump said he

was in no hurry.

Energy stocks led the S&P gains, while utilities

and consumer staples lost ground.

Trump had said over the weekend 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.

"The president was so quick to offer a 30-day stay of

execution to Mexico and Canada, so you get the idea that maybe

what he's really trying to do is embrace a quick declaration of

victory which doesn't change much from a trade perspective,"

said Sam Stovall, chief investment strategist at CFRA Research.

"Investors have been breathing a sigh of relief today and

we'll see if a month from now they can continue to breathe that

sigh of relief."

Strong corporate earnings have also buoyed investor

optimism. Of the 211 companies in the S&P 500 that have reported

earnings for the fourth quarter, 76.8% reported above analyst

expectations, according to an S&P earnings scorecard.

Alphabet rose ahead of its quarterly results,

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

advanced.

Palantir ( PLTR ) shares jumped after the data analytics

company forecast first-quarter and annual revenue above Wall

Street estimates.

According to preliminary data, the S&P 500

gained 42.51 points, or 0.71%, to end at 6,037.08 points,

while the Nasdaq Composite gained 259.19 points, or

1.34%, to 19,651.14. The Dow Jones Industrial Average

rose 132.56 points, or 0.30%, to 44,554.47.

Biotechnology firm Illumina ( ILMN ) dropped, while PVH Corp ( PVH )

, the holding company for brands including Calvin Klein,

slipped after China placed the companies on its "unreliable

entity list".

Trump's delayed tariffs for Canada and Mexico helped the

three major U.S. stock indexes pare some of the heavy losses

suffered earlier on Monday and close 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 after it

forecast annual profit below expectations and missed quarterly

revenue estimates.

Estee Lauder ( EL ) plummeted after the cosmetics company

posted another weak quarter amid demand weakness and announced

job cuts.

Merck ( MRK ) dropped 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 after the digital payments giant's

operating margin shrank in the fourth quarter.