Here’s Why Stock Market Bulls are Battling Back

Index ETFs and stocks climbed on Tuesday to regain part of Monday’s decline.

etfs, SPY, IWM, QQQ, GLDMajor index ETFs posted a rally on Tuesday to reclaim part of Monday’s sell off with the Dow Jones Industrial Average (NYSEARCA:DIA) gaining 0.84%, the S&P 500 (NYSEARCA:SPY) adding 0.61%, the Nasdaq 100 (NYSEARCA:QQQ) climbing 0.45% and the Russell 2000 (NYSEARCA:IWM) moving up 0.47%.

In other major markets, gold (NYSEARCA:GLD) rallied 0.82% to close at $1592.50/oz and oil (NYSEARCA:USO) fell 1.17% to $92.18/bbl.

The big news for stocks and ETFs today was Fed Chairman Ben Bernanke’s testimony to Congress in which he supported quantitative easing programs and gave no indication that current programs were going to be ending anytime soon.

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He staunchly defended the benefits of the Fed’s asset buying program but also warned about the potentially negative effects on U.S. stocks and ETFs arising from the upcoming government spending cuts scheduled to go into effect on Friday.

As the clock continues to click towards the Friday deadline, it appears more and more likely that the sequestration cuts will go into effect, at least for a time, as both sides appear no closer to a compromise…