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

Reuters

* 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 ColumbusDay

* 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 volatilesession on Monday, reversing earlier losses on hopes that therewould soon be a deal to end the gridlock in Washington over abudget and increasing the U.S. debt limit.

President Barack Obama was scheduled to meet with severalcongressional leaders, and while the White House said themeeting had been delayed, signs of negotiations were taken as apositive by the market.

Senate Majority Leader Harry Reid and Senate Republicanleader Mitch McConnell, who began talks on Saturday, appearedtogether on the Senate floor and expressed optimism a deal couldbe made final within days.

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

"Bringing everyone together was enough to get us to comeback after opening quite a bit lower, but we're still very muchunder the assumption that we're at an impasse," said RalphBassett, deputy head of North American equities at AberdeenAsset 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 byshaving 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, rose1.7 percent. Trading volume was also low, although that waspartially related to the Columbus Day holiday, with banks andthe 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. TheNasdaq Composite Index was up 18.52 points, or 0.49percent, at 3,810.39.

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

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

"Earnings have been mixed at best, with revenue growthespecially tepid," said Bassett, who helps oversee $312 billionin assets. "By and large, we're focused on companies whereearnings 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 reportedthat the company is in talks with several U.S. cable televisioncompanies, including Comcast Corp and SuddenlinkCommunications, to make its streaming video serviceavailable 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 pointedto softening demand for appliances.

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