The CNN Money Fear and Greed index showed further improvement in overall market sentiment, while the index remained in the "Greed" zone on Wednesday.

U.S. stocks settled higher on Wednesday, with the S&P 500 surging to a record high level during the session.

On the economic data front, U.S. consumer prices rose 0.3% month-over-month in April compared to 0.4% in the previous month, and also down from market expectations of 0.4%. Annual inflation rate in the U.S. slowed to 3.4% in April from 3.5% a month ago. U.S. retail sales came in unchanged month-over-month in April compared to a revised 0.6% increase in March.

Yields on the benchmark 10-year and 2-year Treasurys moved lower following the economic data.

Shares of Arcos Dorados Holdings Inc. (NYSE:ARCO) fell around 6% on Wednesday after reporting results for its first quarter

All sectors on the S&P 500 closed on a positive note, with information technology, real estate and health care stocks recording the biggest gains on Wednesday.

The Dow Jones closed higher by around 350 points to 39,908.00 on Wednesday. The S&P 500 rose 1.17% at 5,308.15, while the Nasdaq Composite gained 1.40% at 16,742.39 during Tuesday's session.

Investors are awaiting earnings results from JD.com, Inc. (NASDAQ:JD), Walmart Inc. (NYSE:WMT), and Deere & Company (NYSE:DE) today.

At a current reading of 59.7, the index remained in the "Greed" zone on Wednesday, versus a prior reading of 57.

What is CNN Business Fear & Greed Index?

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.