Stocks rose higher Tuesday as market optimism returned on news U.S. has agreed to pause its tariffs on major trading partners Canada and Mexico. The Dow Jones Industrial Average climbed over 100 points, while the S&P 500 Index and Nasdaq Composite advanced 0.7% and 1.4%, respectively.

Here's how the market settled on Tuesday:

S&P 500 Index (SPY  -5.85%): +0.72% or +43.31 points to 6,037.88

Dow Jones Industrial Average (DIA  -5.43%): +0.30% or +134.13 points to 44,556.04

Nasdaq Composite Index (QQQ  -6.21%): +1.35% or +262.06 points to 19,654.02

The Chinese government issued tariffs of up to 15% on U.S. imports of coal and liquefied natural gas and 10% higher duties on crude oil, farm equipment and selected cars, effective Feb. 10, in response President Donald Trump's broad 10% levy in the nation.

The new trade war between the U.S. and China comes as the U.S. agreed to pause more aggressive tariffs on Canada and Mexico.

"We see tariffs as yet another element of support for our view that 2025 is a year for buying stocks, not the S&P 500 index -- which is croaded, expensive and has elevated concentration risk," Bank of America strategist Mark Cabana wrote in a note to clients on Tuesday.

Cabana estimates the 25% tariffs on Canada and Mexico, alongside a 10% additional tariff on China, would translate to a 2% impact to the S&P 500's earnings, while bilateral tariffs could see earnings falling 8%.

On the Earnings Front:

Palantir Technologies (PLTR  -11.47%) shares jumped as much as 22% on Tuesday after the software company reported better-than-expected fourth-quarter earnings and issued strong forward guidance. The company expects revenue of between $858 million and $862 billion for its current quarter and $3.74 billion to $376 billion for its full year, each coming ahead of analyst estimates.

"Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution," CEO Alex Karp said in a statement. "Our early insights surrounding the commoditization of large language models have evolved from theory to fact."

Pfizer (PFE  -5.43%) share also rose Tuesday as the pharmaceutical giant reported strong sales of its COVID products. The company said it is on track to deliver overall net cost savings of roughly $45 million by the end of the year from its cost-cutting campaign. Pfizer also reiterated its full year 2025 outlook, forecasting sales of $61 billion to $64 billion, with a comparable to 2024 COVID-related products performance.

CFO Dave Denton told analysts during the company's earnings call on Tuesday that "our revenue volatility is largely in the past as COVID-related uncertainties have diminished. ... Our cost improvement programs have set the stage for ongoing margin expansion."

Spotify (SPOT  -9.87%) shares climbed higher Tuesday after the audio streaming platform recorded its first full year of profitability, ending the year with 1.14 billion euros in net income. In 2024, the company paid a record $10 billion in royalties to the music industry, a trend that is expected to continue with the Spotify's multi year publishing agreement with Universal Music Group reached in January.

For its current quarter, Spotify expects to add net 3 million MAUs, bringing its total to 678 million, with two-third expects to be premium paid subscribers.

For Wednesday:

Market participants will turn their attention towards earnings from Alphabet (GOOG  -3.20%) (GOOGL  -3.40%), Advanced Micro Devices (AMD  -8.57%), Chipotle Mexican Grill (CMG  -5.57%), Novo Nordisk (NVO  -6.78%), Disney (DIS  -5.98%) and Uber (UBER  -7.49%) on Wednesday.