Stocks Sharply Higher, But Below Day's Best; Volume Expands A Bit Rate-Cut Drumbeat Grows Indexes ahead 3%-4%, big traders on sidelines ahead of Fed's meeting.(A)

Byline: CRAIG SHAW

Stocks logged strong gains Tuesday after three days of losses as hope grew that the Federal Reserve will jump-start the economy with another interest rate cut.

Bargain hunters picked up battered shares after the Nasdaq plunged to its lowest close in five years Monday. The dollar surged as investors priced in the possibility the central bank could cut rates yet again to revive the economy.

The Nasdaq rebounded 54 points, or 4.4%, a day after hitting its lowest close since April 1997. The Dow industrials added 230 points, or 2.9%. The S&P 500 jumped 25 points, or 3%.

All three closed well below the day's highs as selling …