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US STOCKS-Wall St rises on hopes for budget deal progress
October 14, 2013 / 7:32 PM / 4 years ago

US STOCKS-Wall St rises on hopes for budget deal progress

* Senate leaders say deal near on budget, debt limit

* Agreement still one or two days away -equities exec

* Trading volume low with bond market closed for Columbus Day

* Netflix shares soar, boosting Nasdaq; Expedia plummets

* Indexes up: Dow 0.3 pct, S&P 0.3 pct, Nasdaq 0.5 pct

By Ryan Vlastelica

NEW YORK, Oct 14 (Reuters) - U.S. stocks rose in a volatile session on Monday, reversing earlier losses on hopes that there would soon be a deal to end the gridlock in Washington over a budget and increasing the U.S. debt limit.

President Barack Obama was scheduled to meet with several congressional leaders, and while the White House said the meeting had been delayed, signs of negotiations were taken as a positive by the market.

Senate Majority Leader Harry Reid and Senate Republican leader Mitch McConnell, who began talks on Saturday, appeared together on the Senate floor and expressed optimism a deal could be made final within days.

Stocks had dipped after weekend talks failed to reach a solution that would reopen the federal government and raise the $16.7 trillion federal borrowing limit by Oct. 17. Failure to raise the debt ceiling could leave the world’s biggest economy unable to pay its bills in the coming weeks.

“Bringing everyone together was enough to get us to come back after opening quite a bit lower, but we’re still very much under the assumption that we’re at an impasse,” said Ralph Bassett, deputy head of North American equities at Aberdeen Asset Management in Philadelphia.

“We expect there will be an agreement in the next day or so, but there’s a lot of fear.”

In addition to the debt ceiling, the government shutdown, entering its third week, was seen as a drag on the economy by shaving a small percentage off the GDP with each passing day.

In a sign of the market’s caution, the CBOE Volatility index , which typically trades inversely to the S&P 500, rose 1.7 percent. Trading volume was also low, although that was partially related to the Columbus Day holiday, with banks and the U.S. bond market closed.

The Dow Jones industrial average was up 42.41 points, or 0.28 percent, at 15,279.52. The Standard & Poor’s 500 Index was up 4.55 points, or 0.27 percent, at 1,707.75. The Nasdaq Composite Index was up 18.52 points, or 0.49 percent, at 3,810.39.

Investors are also looking ahead to corporate earnings this week, with results from Citigroup Inc, Coca-Cola Co , Johnson & Johnson, and Intel Corp on tap. Market participants are looking to see what kind of impact the issues in Washington have had on results and forecasts.

With 6 percent of S&P 500 companies having reported, 55 percent have topped profit expectations, a rate below the historical average.

“Earnings have been mixed at best, with revenue growth especially tepid,” said Bassett, who helps oversee $312 billion in assets. “By and large, we’re focused on companies where earnings growth isn’t dependent on GDP being at a certain rate.”

Shares of Netflix Inc rose 5.5 percent to $317.38, as the S&P’s top gainer, after the Wall Street Journal reported that the company is in talks with several U.S. cable television companies, including Comcast Corp and Suddenlink Communications, to make its streaming video service available through their set-top boxes.

On the downside, Expedia Inc plunged 6.6 percent to $48.31 after Deutsche Bank downgraded it to “hold” from “buy.”

Shares of washing machine manufacturer Whirlpool were down 5.6 to $132.50. A note from Cleveland Research pointed to softening demand for appliances.

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