* Fiscal cliff negotiations move ahead, lifting banks,
* Gunmakers' shares fall in aftermath of school massacre
* Apple shares jump after recent losses
* Dow up 0.9 pct, S&P 500 up 1.2 pct, Nasdaq up 1.5 pct
By Rodrigo Campos
NEW YORK, Dec 18 U.S. stocks rallied on strong
volume on Tuesday, capping off the S&P 500's best two-day run in
a month, on confidence that a deal would be struck in Washington
to avoid painful spending cuts and tax hikes that could hurt the
Banks, energy and technology - sectors that would benefit
during economic expansion - led gains as investors remain
confident that lawmakers will come to an agreement to avoid the
so-called "fiscal cliff" deadline at the end of the year.
The PHLX oil services sector index jumped 3.1
percent, with eight of its 15 components up 3 percent or more.
"The view is that the economy is getting better, and that is
always good for energy demand," said Shawn Hackett, president at
Hackett Financial Advisors in Boynton Beach, Florida.
Hackett said the United States would avoid "whatever the
cliff means" for the economy, allowing investors to focus on
President Barack Obama's most recent offer to Republicans in
the ongoing budget talks makes concessions on taxes and social
programs spending. House Speaker John Boehner said the offer is
"not there yet," though he remains hopeful about an agreement.
Senate Democrats, however, have expressed concern about cuts to
Financial stocks shot higher, as traders bet on a greater
demand for loans and a steepening of the yield curve. U.S.
government debt sold off Tuesday, with the benchmark 10-year
U.S. Treasury note's yield briefly hitting its
highest since late October.
The S&P financial sector added 1.5 percent.
The Dow Jones industrial average rose 115.57 points,
or 0.87 percent, to 13,350.96 at the close. The S&P 500
gained 16.43 points, or 1.15 percent, to 1,446.79. The Nasdaq
Composite added 43.93 points, or 1.46 percent, to
It was the S&P 500's first back-to-back gain of more than 1
percent since late July.
Stocks of smaller companies outperformed the broader market,
with the Russell 2000 up 1.5 percent.
Shares of firearm makers sank in the aftermath of a school
shooting in Newtown, Connecticut, on Friday that killed 20 young
children and six adults.
Smith and Wesson fell 10 percent to $7.79 on its
largest-ever daily volume, though it was still up about 77
percent so far this year. Sturm Ruger and Co slid 7.7
percent Tuesday to $40.60.
Private equity firm Cerberus Capital Management said it
would sell gunmaker Freedom Group, whose Bushmaster AR-15 rifle
was used in the Connecticut massacre. Dick's Sporting Goods
suspended the sale of certain semi-automatic rifles in
its stores nationwide.
Technology shares rose, led by Apple, up 2.9
percent at $533.90 after losing nearly 13 percent in the last
two weeks. The S&P Information Technology Index rose 1.7
Arbitron Inc surged 23.6 percent to $47.03 after
Nielsen Holdings NV agreed to buy the media and
marketing research firm in a deal worth $1.26 billion. Nielsen
rose 4.4 percent to $30.92.
About 7.4 billion shares changed hands on the New York Stock
Exchange, the Nasdaq and NYSE MKT, more than the daily average
so far this year of about 6.5 billion shares.
On the NYSE, roughly 14 issues rose for every five that
fell, while on the Nasdaq, advancers outnumberd decliners by a
ratio of about 5 to 2.