US STOCKS-Market rallies on emerging 'fiscal cliff' deal
* S&P 500 on track for double-digits gains for 2012
* Tentative deal could get GOP support: sources
* Apple shares advance, lifting technology sector
* Indexes up: Dow 0.4 pct, S&P 0.7 pct, Nasdaq 1 pct
NEW YORK, Dec 31 (Reuters) - U.S. stocks jumped on Monday after a deal emerged from negotiations in Washington to avert the "fiscal cliff," sources familiar with the talks said.
Equities surged in a thinly traded session, on track to break a five-day streak of losses, as the sources said a majority of Senate Republicans were expected to support the legislation.
If adopted by Congress and President Barack Obama, the plan would sidestep a combination of tax hikes and spending cuts that many feared could push the economy into recession.
The deal, which would still need to be approved by both the Senate and House of Representatives, would raise tax rates for individuals with annual income over $400,000 a year but permanently extend middle class tax cuts.
"The market just wants this resolved and especially resolved in a way where the impact is pushed as far down the road as possible," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "That is exactly what the market wants and I'm hoping that is what they deliver."
President Barack Obama is scheduled to speak on the fiscal cliff at 1:30 p.m. (1830 GMT).
"Right now the market is up 70 points, an hour from now we could be down 70 points, it all depends on what these people say," Mendelsohn said.
The Dow Jones industrial average was up 50.38 points, or 0.39 percent, at 12,988.49 after trimming some of its gains. The Standard & Poor's 500 Index was up 9.73 points, or 0.69 percent, at 1,412.16. The Nasdaq Composite Index was up 31.37 points, or 1.06 percent, at 2,991.68.
The S&P 500 is now up 12.4 percent for the year, compared with a flat performance in 2011. The Dow is about 6.4 percent higher and the Nasdaq is up 15 percent.
Gains in Apple Inc, the most valuable U.S. company, helped lift the Nasdaq. The stock rose 3.2 percent to $525.71, lifting the S&P information technology sector up 1 percent. For the year so far, Apple is up 29.1 percent.
The Dow was lifted by Caterpillar Inc and General Electric, both of which rallied more than 1 percent.
While a deal on the cliff is not yet official, investors may be ready to take on more risk next year in hopes of a greater reward.
Bank stocks rose after a New York Times report that U.S. regulators are nearing a $10 billion settlement with several banks that would end the government's efforts to hold lenders responsible for faulty foreclosure practices.
Bank of America Corp was up 0.8 percent at $11.46.
Financial stocks were among the strongest of the year, with the S&P financial index surging 24.5 percent for 2012 so far. Bank of America is the top-performing Dow component, with its stock price more than doubling over the past 12 months.
Trending On Reuters
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video