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

Reuters

* Senate leaders say deal near on budget, debt limit

* Trading volume low with bond market closed for ColumbusDay

* Netflix shares soar, boosting Nasdaq; Expedia plummets

* Indexes up: Dow 0.4 pct, S&P 0.4 pct, Nasdaq 0.6 pct

By Ryan Vlastelica

NEW YORK, Oct 14 (Reuters) - U.S. stocks ended a volatilesession with modest gains on Monday, as investors bet that therewould soon be a deal in Washington to increase the debt limit,though there were no obvious signs of progress.

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, rose1.8 percent. Trading volume was low, although that was partiallyrelated to the Columbus Day holiday, with banks and the U.S.bond market closed.

About 4.77 billion shares changed hands on the New YorkStock Exchange, the Nasdaq and NYSE MKT, below the daily averageso far this year of more than 6 billion shares.

The Dow Jones industrial average was up 64.15 points,or 0.42 percent, at 15,301.26. The Standard & Poor's 500 Index was up 6.94 points, or 0.41 percent, at 1,710.14. TheNasdaq Composite Index was up 23.40 points, or 0.62percent, at 3,815.28.

The day's gains were broad, with eight of the S&P's 10sectors higher. The two decliners were sectors considereddefensive: telecom and utilities. About 55 percent of stockstraded on the New York Stock Exchange closed higher while 59percent of Nasdaq-listed shares closed up.

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, below the historicalaverage.

"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 7.8 percent to $324.36,as the S&P's top gainer, after the Wall Street Journal reportedthat the company is in talks with several U.S. cable televisioncompanies, to make its streaming video service available throughtheir set-top boxes.

On the downside, Expedia Inc plunged 6.2 percent to$48.51 after Deutsche Bank downgraded it to "hold" from "buy."

Appliance maker Whirlpool fell 6.5 percent to$131.29. A note from Cleveland Research pointed to softeningdemand for appliances.

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