US stocks rallied on Tuesday, when investors re-assessed the risks over China's real estate sector and potential tapering by the Federal Reserve.

The S&P 500 opened higher, initially suggesting some improvement in sentiment after concerns about the impact of Evergrande's debt problems that shook markets last Monday.

Adam Phillips, managing director of EP Wealth Advisors, said: "Investors remain on the edge of their seats as they await tomorrow's update from the Fed as well as details around if and how the Chinese government will respond to the Evergrande crisis."

Aside from concerns about Evergrande's ability to pay off the $ 300 billion debt, investors are gearing up for the two-day Fed meeting that started on Tuesday. Many expect the members to begin laying groundwork for tapering. Accordingly, Treasury yields rose and dollar remained stable.

There are also concerns about the coronavirus, said John A. Carey, a money manager at Pioneer Investment Management.

But the largest threat is the real estate turmoil in China, which is part of President Xi Jinping's broader crackdown on private businesses. Sadly, it exacerbates the risks investors face. These include undervalued stocks and a slower economic reopening due to the Delta strain and commodity-driven price pressures.

Markets are also digesting a forecast of reduced support for central bank policies.

Other important events to watch out for this week are:

- policy decision of the Bank of Japan (Wednesday);

- policy decision of the Federal Reserve (Wednesday);

- policy decision of the Bank of England (Thursday);

- speeches of Jerome Powell, Michelle Bowman and Richard Clarida (Friday).