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

U.S. stocks settled higher on Tuesday, with the Nasdaq Composite surging to a new closing record level during the session.

On the economic data front, U.S. producer prices rose 0.5% month-over-month in April compared to a revised 0.1% decline in March and higher than market expectations of 0.3%. Data on consumer prices for April will be released today.

Alibaba Group Holding Limited (NYSE:BABA) reported weaker-than-expected earnings for its fiscal fourth-quarter. Home Depot Inc (NYSE:HD) reported downbeat sales for its first quarter on Tuesday.

Most sectors on the S&P 500 closed on a positive note, with information technology, real estate and financial stocks recording the biggest gains on Tuesday. However, consumer staples and energy stocks bucked the overall market trend, closing the session lower.

The Dow Jones closed higher by around 127 points to 39,558.11 on Tuesday. The S&P 500 rose 0.48% at 5,246.68, while the Nasdaq Composite gained 0.75% at 16,511.18 during Tuesday's session.

Investors are awaiting earnings results from Dole plc (NYSE:DOLE), Arcos Dorados Holdings Inc. (NYSE:ARCO), and Cisco Systems, Inc. (NASDAQ:CSCO) today.

At a current reading of 53.9, the index remained in the "Neutral" zone on Tuesday, versus a prior reading of 50.9.

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.