US STOCKS-Nasdaq leads Wall St higher on hopes of less-hawkish Federal Reserve

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Earnings from Microsoft, Alphabet awaited

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U.S. consumer confidence falls in October

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Coca-Cola jumps after raising annual outlook

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3M falls due to FY forecast on dollar impact

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Indexes up: Dow 0.82%, S&P 1.27%, Nasdaq 1.88%

(Adds comments, updates prices to early afternoon)

By Amruta Khandekar and Shreyashi Sanyal

Oct 25 (Reuters) - The Nasdaq led Wall Street's main indexes higher on Tuesday, as U.S. Treasury yields dropped amid growing bets of a let up in the pace of interest-rate hikes on more signs of a cooling economy.

Home prices dropped sharply in August, while consumer confidence fell in October, coming on the back of a contraction in U.S. business activity, suggesting that the Federal Reserve's aggressive policy to tame inflation is beginning to take root.

The tech-heavy Nasdaq jumped more than 2% in the session as the 10-year Treasury yield hit the day's low of 4.05% before bouncing slightly.

"We know we're going to get a three-quarter point hike (in November), but there's a possibility that that'll be only a half a point when we get to December," said Randy Frederick, managing director, trading and derivatives at Charles Schwab in Austin.

"There has been quite a bit of discussion from Fed members that the Fed may completely pause at that point going into next year, which may be a little optimistic."

Meanwhile, investors are focusing on earnings from megacap tech companies, including Microsoft and Google-owner Alphabet, for clues on how corporate America is holding up in the face of inflation and rising interest rates.

Shares of Microsoft and Alphabet, which will report results after market close, were up 0.8% each, while Apple and Amazon.com also rose ahead of quarterly earnings later this week.

The earnings season has been better than expected, with nearly three quarters of the 129 companies in the S&P 500 exceeding profit estimates, according to Refinitiv data.

Among the Dow components, Coca-Cola Co rose 1.3% after the company raised its annual revenue and profit forecasts, banking on steady demand amid price increases.

3M, on the other hand, fell 0.4% as it cut its full-year revenue and profit forecasts due to a stronger dollar.

General Motors jumped 4% after reaffirming its full-year outlook. Raytheon Technologies Corp fell 1.8% as the aerospace supplier trimmed its sales outlook, while United Parcel Service Inc added 1.3% on stronger-than-expected adjusted profit.

The three main stock indexes are set to rise for the third straight session, with the benchmark S&P 500 up more than 7% from its recent closing low hit on Oct. 12.

At 12:42 p.m. ET, the Dow Jones Industrial Average was up 258.86 points, or 0.82%, at 31,758.48, the S&P 500 was up 48.21 points, or 1.27%, at 3,845.55, and the Nasdaq Composite was up 206.02 points, or 1.88%, at 11,158.63.

Advancing issues outnumbered decliners by a 5.56-to-1 ratio on the NYSE and by a 4.32-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and one new low, while the Nasdaq recorded 61 new highs and 101 new lows. (Reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel and Arun Koyyur)