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

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Alphabet misses quarterly revenue estimates

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Indexes up: Dow 0.3%, S&P 0.72%, Nasdaq 1.35%

(Updates after 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, rising 2.18%, 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.

Palantir ( PLTR ) shares jumped 24% after the data analytics

company forecast first-quarter and annual revenue above Wall

Street estimates.

Meanwhile, Alphabet rose 2.6% ahead of its

quarterly results, but posted revenue that missed expectations

after the close, partly due to a slowdown in its cloud computing

business. The stock was down more than 7% in after-market

trading.

The Dow Jones Industrial Average rose 134.13 points,

or 0.30%, to 44,556.04, the S&P 500 gained 43.31 points,

or 0.72%, to 6,037.88 and the Nasdaq Composite gained

262.06 points, or 1.35%, to 19,654.02.

Biotechnology firm Illumina ( ILMN ) dropped 5.3%, while PVH

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

Klein, slipped nearly 1% after China placed the companies on its

"unreliable entity list".

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 4.5% after it

forecast annual profit below expectations and missed quarterly

revenue estimates.

Estee Lauder ( EL ) plummeted 16.1% after the cosmetics

company posted another weak quarter amid demand weakness and

announced job cuts.

Merck ( MRK ) dropped 9.1% 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 13.2% after the digital payments

giant's operating margin shrank in the fourth quarter.

Advancing issues outnumbered decliners by a 2.81-to-1 ratio

on the New York Stock Exchange. There were 121 new highs and 61

new lows on the NYSE.

On the Nasdaq, 3,035 stocks rose and 1,323 fell as advancing

issues outnumbered decliners by a 2.29-to-1 ratio.

Volume on U.S. exchanges was 13.39 billion shares, compared

with the 15.53-billion average for the full session over the

last 20 trading days.