Calm is returning to Wall Street Tuesday, and tech stocks are leading U.S. stock indexes higher following a strong profit report from Palantir Technologies, a darling benefitting from the artificial-intelligence boom.

The S&P 500 was up 0.5% as of 2:01 p.m. Eastern time, a day after swinging sharply on worries that President Donald Trump’s tariffs could spark a trade war that would hurt economies around the world, including the United States.

The Dow Jones Industrial Average was up 46 points, or 0.1%, and the Nasdaq composite was 1.1% higher.

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Trump’s Tariff Delay Eases Tensions

Trump on Monday agreed to delay his taxes on U.S. imports of Canadian and Mexican products for a month, with the announcement on Canada coming after trading closed for the day. That bolstered Wall Street’s longstanding hopes that Trump’s tough talk on tariffs may be just that, talk. The hope is that Trump sees tariffs as a stick he can use in negotiations with trading partners rather than as a long-term policy.

That hope is built in part on traders’ belief that Trump would likely be turned off by the damage Wall Street would take if a worst-case, long-term trade war were to occur. Trump has pointed in the past to the stock market as a real-time measure of his approval.

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Caution Advised Amid Trade Uncertainty

But a trade war is still possible, and some analysts say more swings may be coming because Trump’s threats should be taken both seriously and literally.

“Investors have suggested the equity market is the US administration’s scorecard and any policy changes that hurt risk assets will be quickly dialed back,” Bank of America strategists led by Mark Cabana wrote in a BofA Global Research report. “We advise caution.”

They say a big takeaway from all the tariff tumult is that the Trump administration is transactional, and “nothing is settled until it is final.”

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China Retaliates with Tariffs and Antitrust Investigation

Trump is pressing ahead with a 10% tax on U.S. companies importing things from China, for example. And China retaliated on Tuesday by announcing its own tariffs on some U.S. imports and an antitrust investigation into Google.

But the 15% tariff on U.S. coal and liquefied natural gas products, as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the U.S. won’t take effect until Monday. That leaves time for more negotiation between Trump and Chinese President Xi Jinping.

Market Reactions and Company Performances

The stock price of Google’s parent company, Alphabet, rose 1.8%. The company will report its latest results after the market closes.

Elsewhere on Wall Street, stocks that had swung sharply a day before when worries were high about tariffs on Mexico and Canada were calmer.

Auto makers had dropped because so much of their production occurs in Mexico, for example. But General Motors rose 1.6%, and Ford Motor climbed 2.3%.

Palantir Technologies jumped 22.1% and was one of the strongest forces lifting the S&P 500 after reporting a stronger profit for the latest quarter than analysts expected. The Denver company also issued forecasts for upcoming revenue that were ahead of analysts’ projections, as CEO Alexander Karp said his company is at the “center of the AI revolution.”

Pharmaceutical giant Merck tumbled 9.9% despite beating sales and profit forecasts for the latest quarter. It gave a forecast for upcoming revenue that fell short of analysts’ expectations, due partly to a pause in shipments of one of its top-selling products to China.

Bond Market and Global Stock Performance

In the bond market, Treasury yields edged lower after a report indicated the U.S. job market may be adding less upward pressure on inflation. U.S. employers advertised fewer job openings than economists expected at the end of December, indicating a slowing but still healthy job market.

The yield on the 10-year Treasury edged down to 4.52% from 4.56% late Monday. The two-year yield, which moves more closely with expectations for what the Federal Reserve will do with short-term interest rates, eased to 4.22% from 4.25%

In stock markets abroad, London’s FTSE 100 slipped 0.1%, but other big European markets rose modestly.

In Asia, Hong Kong’s Hang Seng jumped 2.8%, and South Korea’s Kospi rose 1.1%.