Optimism on budget talks lifts Wall Street Apple shares gained momentum on Tuesday after Japanese smartphone rival Samsung Electronics withdrew its lawsuit in Europe against the iPhone maker. Shares in Apple, which have lost a third of their value in the past three months, rose 0.5 per cent to $521.08 adding to gains from the previous session. Apple, the most heavily weighted stock on both the S&P 500 index and Nasdaq Composite, lifted the technology sector higher. The main indices were also inching higher an hour after the opening bell as investors were optimistic about the budget deal in Washington after both sides were seen making concessions to avert the fiscal cliff of automatic spending cuts and tax rises. President Barack Obama offered to leave lower tax rates for those earning less than $400,000, increasing the limit from his previous position of $250,000. The benchmark S&P 500 index added 0.6 per cent to 1,439.10. The Dow Jones Industrial Average was 0.4 higher to 13,290.41 and the technology-heavy Nasdaq Composite rose 0.8 per cent to 3,035.88. "Markets are reacting to any bit of good news, looking for some kind of certainty, without realising that the fiscal cliff has too many moving components and not all of them will be resolved by the deadline," said Karyn Cavanaugh, US market strategist at ING Investments. Uncertainty around the fiscal cliff has affected businesses, which have pulled back and we saw that in the third-quarter earnings. We believe the fourth-quarter earnings will be tough as well. Manufacturers of firearms were in focus again, after Cerberus announced it plans to sell its stake in Freedom Group, a private firm that manufactures Bushmaster rifles believed to have been used to kill 20 children and six adults at a school in Newtown, Connecticut. Shares in rival gun manufacturers listed on the stock market plunged, adding to steep losses from the previous session. Smith and Wesson shares fell 9.8 per cent to $7.83 on Tuesday, while Sturm Ruger shares were down 5.4 per cent to $41.60. Banking stocks were rallying again on Tuesday morning, after registering solid gains during the previous session. Bank of America gained 1.7 per cent to $11.19, Goldman Sachs also rose 2.3 per cent to $126.38. Citigroup and JPMorgan were up 0.8 per cent to $39.47 and 0.6 per cent to $43.73 respectively. Facebook and Groupon shares attracted buyers, with prices up 1.5 per cent to $27.14 and 2.9 per cent to $4.93 respectively.