US STOCKS-Wall Street ends higher on US-China trade optimism, energy boost

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 .SPNY led the S&P gains, while utilities .SPLRCU and consumer staples .SPLRCS 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 GOOGL.O rose ahead of its quarterly results, which are due after markets close, while Nvidia NVDA.O also advanced.

Palantir PLTR.O 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 .SPX gained 42.51 points, or 0.71%, to end at 6,037.08 points, while the Nasdaq Composite .IXIC gained 259.19 points, or 1.34%, to 19,651.14. The Dow Jones Industrial Average .DJI rose 132.56 points, or 0.30%, to 44,554.47.

Biotechnology firm Illumina ILMN.O dropped, while PVH Corp PVH.N, 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.O fell after it forecast annual profit below expectations and missed quarterly revenue estimates.

Estee Lauder EL.N plummeted after the cosmetics company posted another weak quarter amid demand weakness and announced job cuts.

Merck MRK.N 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.O fell after the digital payments giant's operating margin shrank in the fourth quarter.