* Fiscal cliff negotiations move ahead, lifting banks,
* Top Republican says vote in Congress could come this week
* Gun makers' shares fall after Newtown, CT, shooting
* Dow up 0.8 pct, S&P 500 up 1 pct, Nasdaq up 1.3 pct
NEW YORK, Dec 18 (Reuters) - U.S. stocks climbed on Tuesday,
putting the S&P 500 on track for its best two-day run in a
month, as investors gained confidence that "fiscal cliff" talks
were progressing, even as significant differences separate
Democrats and Republicans in Washington.
The gains followed a rally on Monday that lifted the S&P 500
to its highest point in nearly two months. Investors remain
confident that Washington will come to an agreement to avoid a
series of spending cuts and tax hikes before the end of the year
that could hurt economic growth.
President Barack Obama's most recent offer makes concessions
to the Republicans in taxes and entitlement spending, but 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 entitlement cuts,
particularly to Social Security.
"As you get more and more clarity and dialogue that there
will be a compromise to avoid a fiscal cliff, I think the
markets are going to rally," said Weston Boone, vice president
of listed trading at Stifel Nicolaus Capital Markets, in
"What's holding this market back - the S&P 500 - from
continuing to reach higher highs is the macro headwinds, and a
lot of that emanates from (Washington) D.C."
For a second day, banks led the rally. Goldman Sachs Group
shares shot up 3.1 percent to $127.30 and Morgan Stanley
gained 3.2 percent to $19.13 after Jefferies Group
reported a higher-than-expected adjusted quarterly
Jefferies rose 2.9 percent to $18.77. The S&P 500 Financial
Index climbed 1.2 percent.
"I think it's an expectation that if the fiscal cliff is
resolved, it's going to be a better environment in 2013 for the
financial names," said Michael James, senior trader at Wedbush
Morgan in Los Angeles.
Shares of firearm makers sank on Tuesday as investors sold
after the school shooting in Newtown, CT on Friday that killed
20 children and six adults.
Smith and Wesson fell 9.8 percent to $7.81, as the
stock stayed on track for its busiest day in history. Sturm
Ruger and Co slid 8.3 percent to $40.35.
The Dow Jones industrial average jumped 104.46
points, or 0.79 percent, to 13,339.85. The Standard & Poor's 500
Index rose 13.77 points, or 0.96 percent, to 1,444.13.
The Nasdaq Composite Index gained 39.29 points, or 1.31
percent, to 3,049.89.
Tech shares rose, and gains in large-cap technology shares
lifted the Nasdaq. Seagate Tech rose 4.9 percent to
$29.41 while F5 Networks Inc gained 4.7 percent to
$96.93. The S&P Information Technology Index rose 1.5
The S&P Energy Index also climbed 1.5 percent.
Baker Hughes Inc said third-quarter margins and
revenue would be below its expectations because of lower land
drilling activity and price erosion. Shares rose 4.3 percent to
$42.3417, reversing a decline in the premarket session.
Arbitron Inc surged 23.6 percent to $47 after
Nielsen Holdings NV agreed to buy the media and
marketing research firm in a deal worth $1.26 billion. Nielsen
rose 3.5 percent to $30.66.