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Not giving up: A trader working on the floor of the New York Stock Exchange. There are signs that sentiment has improved as stocks embarked on the longest rally of the year, with the S&P 500 jumping 11% from the June low. — AFP

THE extreme pessimism that’s gripped American stock investors for much of the year is starting to dissipate. That might be reason for caution.

Stock bulls betting the whiff of recession means the worst of the Federal Reserve’s (Fed) rate-hike medicine has been administered drove the S&P 500 to a second day of gains and the highest level in almost two months.

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