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* Merck, Pfizer gain on upbeat earnings
* Alphabet falls after missing profit estimates
* Two-day Fed policy meeting starts on Tuesday
* Indexes: S&P up 0.17%, Dow up 0.16%, Nasdaq off 0.37% (Adds comments, updates market action)
By Arjun Panchadar
Oct 29 (Reuters) - The S&P 500 touched a new record high on Tuesday as investors cheered strong earnings from big drugmakers Merck and Pfizer, while a disappointing profit from Google parent Alphabet kept the Nasdaq firmly in the red.
Hopes of a U.S.-China trade deal and expectations of another rate cut by the Federal Reserve when it concludes its two-day meeting on Wednesday have kept markets inching higher this week.
Merck & Co Inc and Pfizer Inc both gained about 3% after reporting upbeat third-quarter results. The healthcare sub-index, which has been the second-worst performer among the 11 major S&P 500 sectors this year, rose 1.2%.
“The healthcare stocks are up after earnings and that’s a good sign,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Jersey City, New Jersey.
“Some of those stocks have gotten a little bit beat up due to political risk so there is a lot of room for an upside move.”
Shares of Alphabet Inc, however, slipped 1.8% as its quarterly profit missed estimates due to higher costs.
Third-quarter earnings of S&P 500 companies have largely been better than expected, easing some of the concerns over growth which have dogged markets this year, with over 78% of the 204 firms to report so far surpassing profit expectations, according to Refinitiv data.
“There is a little bit of a ray of sunshine poking through some very dark clouds in the market with ... talks regarding the U.S.-China trade continuing to be more positive than negative,” said John Brady, senior vice president at R.J. O’Brien & Associates in Chicago.
Other marquee names reporting this week include tech and internet heavyweights Apple Inc and Facebook Inc as well as oil majors Exxon Mobil Corp and Chevron Corp .
All eyes will now be on the Fed meeting, where the central bank is widely expected to deliver a quarter percentage point interest rate cut for the third time this year.
At 11:16 a.m. ET the Dow Jones Industrial Average was up 42.78 points, or 0.16%, at 27,133.50, the S&P 500 was up 5.13 points, or 0.17%, at 3,044.55 and the Nasdaq Composite was down 30.91 points, or 0.37%, at 8,295.08.
Beyond Meat Inc dropped 18.6% as the vegan burger maker said it would need to offer more store discounts amid rising competition.
Shares of GrubHub Inc plunged 42.5% after the online food delivery company warned of slowing growth as customers opted to choose from a growing pool of rival providers.
General Motors Co gained 5.4% after its quarterly net profit topped estimates but the carmaker slashed its earnings forecast for 2019 as the 40-day U.S. labor strike by the United Auto Workers union brought virtually all of its North American operations to a standstill.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE and for a 1.03-to-1 ratio on the Nasdaq.
The S&P index recorded 35 new 52-week highs and no new lows, while the Nasdaq recorded 69 new highs and 45 new lows. (Reporting by Arjun Panchadar and Medha Singh in Bengaluru; Editing by Anil D’Silva and Patrick Graham)