The CNN Money Fear and Greed index showed further improvement in the overall market sentiment, while the index remained in the “Neutral” zone on Tuesday.

U.S. stocks settled higher on Tuesday, with the Dow Jones index gaining around 1% during the session, extending record highs as investors rotated into cyclical and blue-chip stocks.

On the downside, Tesla Inc. (NASDAQ:TSLA) fell more than 4%, marking its tenth decline in 11 sessions. Competitive pressure in the robotaxi market weighed on sentiment, alongside reports of market share losses in Europe against Chinese EV-maker BYD.

On the economic data front, the S&P Global services PMI declined to 52.5 in December from 54.1 in the prior month, compared to the preliminary reading of 52.9. The S&P Global composite PMI fell to 52.7 in December, recording the lowest level in eight months, versus the preliminary reading of 53 and down from 54.2 in the previous month.

Most sectors on the S&P 500 closed on a positive note, with materials, health care, and industrials stocks recording the biggest gains on Tuesday. However, energy and communication services stocks bucked the overall market trend, closing the session lower.

The Dow Jones closed higher by around 485 points to 49,462.08 on Tuesday. The S&P 500 gained 0.62% to 6,944.82, while the Nasdaq Composite climbed 0.65% to close at 23,547.17 during Monday's session.

What is CNN Business Fear & Greed Index?

At a current reading of 52.1, the index remained in the “Neutral” zone on Tuesday, versus a prior reading of 47.9.

The Fear & Greed Index is a measure of the current market sentiment. It is based on the premise that higher fear exerts pressure on stock prices, while higher greed has the opposite effect. The index is calculated based on seven equal-weighted indicators. The index ranges from 0 to 100, where 0 represents maximum fear and 100 signals maximum greediness.

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