* Top Republican lawmaker optimistic can avert fiscal crisis
* U.S. new home sales dip, prior estimate revised lower
* Obama to meet with CEOs from Goldman, Deloitte
* Costco to pay $7 special dividend on Dec 18
* Dow up 0.6 pct, S&P 500 up 0.4 pct, Nasdaq up 0.3 pct
By Edward Krudy
NEW YORK, Nov 28 U.S. stocks turned higher on Wednesday on investors' hopes that a compromise could be reached to avoid the "fiscal cliff" after comments from U.S. House Speaker John Boehner and President Barack Obama.
Shares of Costco Wholesale Corp jumped 5.5 percent to $101.81 after the retailer became the latest company to announce a special dividend in case taxes jump next year.
The market sharply pared losses in volatile late morning trading after Boehner, the top Republican in Congress, said he was optimistic that a deal on the "fiscal cliff" to avert large tax hikes and spending cuts could be reached. That helped reverse a slide of 1 percent.
Adding to the more positive tone, the president, speaking later in the day, said he hoped to get a deal done before Christmas.
For weeks now, the market has been swinging back and forth on headlines from Washington. Wednesday's gyrations served to once again highlight the extent that the impasse is affecting the market and the likelihood of more volatility to come.
"There's only one issue in front of the financial markets, and it's the debate on the fiscal cliff," said Jack De Gan, chief investment officer of Harbor Advisory Corp in Portsmouth, New Hampshire.
"That's the only issue out there, and I think in the short term, there's not much that we can do other than watch, and try to anticipate what's going to happen."
One possible result of the deficit-reduction talks is a rise in the tax rate on dividends, prompting some companies to issue special dividends or move up plans for dividends.
The latest example is retailer Costco, which said it will pay a special dividend of roughly $3 billion to investors - the largest payout so far from any company ahead of a likely increase in the dividend tax. Costco also posted monthly same-store sales that beat forecasts. Costco's stock hit an intraday high of $102.14, close to its 2012 high of $104.43 set on Oct. 10.
The Dow Jones industrial average gained 79.75 points, or 0.62 percent, to 12,957.88. The Standard & Poor's 500 Index rose 5.87 points, or 0.42 percent, to 1,404.81. The Nasdaq Composite Index added 9.04 points, or 0.30 percent, to 2,976.83.
Knight Capital Group Inc shares jumped 14.1 percent to $3.39 on news that Getco LLC has sent a proposal for a merger between Getco and Knight Capital at a price of $3.39 per share, according to a regulatory filing.
Obama is meeting on Wednesday at the White House with chief executives from top corporations, including Goldman Sachs , Deloitte LLP and Caterpillar Inc, to discuss U.S. fiscal problems.
"While there's little that the president and vice president could do at today's meeting to improve moods in America's corner office, we still believe a legislative compromise will be reached before 'fiscal cliff' detonates," said Jack Ablin, chief investment officer of BMO Private Bank, in Chicago.
"In the meantime, we expect daunting headlines and emotional market volatility."
On the earnings front, Green Mountain Coffee Roasters Inc forecast quarterly and full-year earnings well ahead of analysts' expectations, helped by an expanded lineup of single-serve coffee makers and drinks. The company's stock surged 24 percent to $35.91.
The S&P 500's drop of 1 percent in the morning was partly caused by data that showed U.S. single-family home sales fell in October, casting a shadow over what has been one of the brighter spots in the U.S. economy.
Housing stocks fell after the data. The PHLX housing index slipped 0.5 percent. D.R. Horton Inc, the biggest U.S. home builder, fell 1.2 percent to $19.34.