Stock markets rallied on Tuesday after four weeks decline

U.S. stocks rallied after trading on the bearish territory during the last four weeks. European shares gained the most in three months amidst broad gains for equities.

The S&P 500 Index surged forward by 1.6% on Tuesday, while the Stoxx Europe 600 Index jumped by 2.2%. Banks brought the S&P 500 Index its biggest gain in two weeks. Traders found buying opportunities after the gauge plunged to its lowest level since July last week. Ten or more stocks were higher on the benchmark for every one that dropped.

HSBC Holdings Plc skyrocketed by almost 9% after its biggest shareholder increased its stake, while an index of lenders climbed up the most a month.

Shares also soared in Asia. The MSCI Asia Pacific Index surged forward by 1.3%, and the MSCI Emerging Market Index added 1.1%.

Will the U.S. authorities add new stimulus?

The Federal Reserve continues to provide liquidity while there are some signs that U.S. politicians are moving toward the new fiscal stimulus. Investors are hopeful, bolstering the stocks. Stronger economic reports from China lifted their sentiment as well. Data over the weekend showed profits at Chinese industrial companies increased for a fourth consecutive month in August.

John Porter, the head of equities at Mellon Investments, stated that the Fed is making it nearly impossible for traders to get too bearish. Meanwhile, the market is getting more comfortable with the realization that coronavirus will be with us for a while now.

The advance in global stocks was broad and not only tech-focused. It’s a sign that optimism about economic growth and the end of pandemic lockdowns is returning. Despite that, equities remain on course for the first month of losses since March due to investors selling overheated stocks. Fears about a resurgence of the virus cases weighed on airlines and retailers.

Chris Larkin, managing director of trading and investment product at E*Trade Financial Corp, noted that September continued to challenge the bulls’ intestinal fortitude. However, charting the S&P 500 from March shows the bull market remains intact.