U.S. stock markets saw a strong recovery on Tuesday, with both the S&P 500 and the Nasdaq 100 climbing over 2%, nearly offsetting Monday's losses. Investors took advantage of recent volatility to buy the dip, showing continued confidence in the U.S. economy's ability to avoid a recession.

Gains were observed in both small-cap and blue-chip stocks, reflecting broad improvement in market sentiment.

The CBOE Volatility Index (VIX), often referred to as the market's fear gauge, decreased by almost 40% on Tuesday after spiking 65% on Monday.

According to the FedWatch Tool, the likelihood of a 50-basis-point...