Stocks Climb Ahead of White House Meeting on Debt Deal

trader4 -rStocks shook off their earlier losses to turn higher Monday, led by techs, amid signs of progress over last-ditch negotiations to resolve the fiscal issues gripping Washington.

(Read more: How a US debtdefault could hit your finances)

Senate Democratic Leader Harry Reid said he hopes to have a fiscal plan to present to President Barack Obama at the White House meeting at 3pm ET, according to Reuters.

Stocks poked into positive territory after President Obama noted signs of progress in Senate fiscal impasse negotiations but that there is a good chance the United States will default on its debts if Republicans are unwilling to set aside some partisan concerns.

“My hope is that a spirit of cooperation will move us forward in the next few hours,” he said.

President Obama and Vice President Joe Biden are scheduled to meet Congressional leaders later this afternoon.

The Dow Jones Industrial Average poked into positive territory.

The S&P 500 and the Nasdaq also reversed their earlier losses. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 17.

Among key S&P sectors, techs and energy led the gainers, while utilities sagged.

Major averages rallied last week amid hopes for a deal. The Dow and S&P closed in the black for the week and all three indexes logged their second-best gains for the year on Thursday.

“Today with a semi-holiday (Columbus Day), it will be a game of cat and mouse—the U.S. bond market’s closed, Canada’s closed, Japan’s closed…so the markets will be extremely thin and vulnerable,” said Art Cashin, director of floor operations at UBS Financial Services, noting that equities on Columbus Day have a 65 to 70 percent bias to the upside.

“[It’s] going to be a tough one today, but we’re looking at somewhere around 1,710 and 1,715 as the [resistance area],” he said.

The U.S. government needs to raise the debt ceiling before Oct. 17 in order to avoid a potential default on its debt — the Treasury needs to make a Social Security payment of around $24 billion on Nov. 1.
The expectation that a debt deal may be forthcoming from talks between Senate Majority Leader Harry Reid and Republican leader Mitch McConnell is “very possible,” Sen. Bob Corker, R-Tenn., told CNBC.

“I’ve had some good conversations early this morning. It is between Mitch and Harry. And I think people want to see that come to fruition,” said Corker, who is a member of the Senate Banking Committee.

Weekend talks between lawmakers to strike a deal were unsuccessful, although there were signs of improvement on Sunday, when Senate Democratic leader Harry Reid said he had a “substantive”and “productive conversation” with Senate Republican leader Mitch McConnell. This followed President Barack Obama’s Friday rejection of a proposal by House Republicans for a short-term increase of the ceiling until November 22.

(Read more: Senate leaders talk; GOP blames Obama for gridlock)

As global concerns over the possibility of a default grew, the chief of the International Monetary Fund, Christine Lagarde, said the situation was “very, very concerning” and warned that “creative accounting” was not the right solution.

The shutdown has furloughed nearly 350,000 federal workers, impeded various government services, put continued operations of the federal courts in doubt and stopped the IRS from processing tax refunds.

(Read more: As shutdown drags on, is more global easing coming?)

Netflix rallied after the Wall Street Journal reported the company is in talks with several U.S. cable television companies to make its streaming video service available through set-top boxes.

Expedia tumbled sharply after Deutsche Bank cut its rating on the online travel agency to “hold” from “buy.”

Facebook edged lower after the social-networking giant said it would acquire start-up app-maker Onavo. Financial terms of the were not immediately disclosed.

Semiconductor equipment makers got a boost after JPMorgan initiated coverage of KLA-Tencor and Lam Research with an “overweight” rating and Applied Materials with a “neutral” rating.
Several major companies are slated to post earnings results this week including Citigroup, Coca-Cola, Bank of America, IBM, Goldman Sachs, GE and Morgan Stanley. (See below for full earnings calendar)

S&P 500 companies are expected to post earnings growth of 4.2 percent in the quarter, down from the 8.5 percent rate that had been forecast on July 1, according to the latest data from Thomson Reuters data. Of the 31 S&P components that have reported so far, about 55 percent have topped expectations, below the historical average of 63 percent.

Japan and Hong Kong were shut for public holidays in Asia. China’s Shanghai Composite extended last week’s 2.5 percent gain, on the news that annual consumer inflation rose to a seven-month high in September. However, gains were pared by weekend data that showed a surprise 0.3 percent drop in exports in the same month.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up Next Week:

MONDAY: Columbus Day: Markets open/banks closed
TUESDAY: Empire state mfg survey, IRS deadline, Wal-Mart Investor mtg; Earnings from Citigroup, Coca-Cola, J&J, Intel, Yahoo, CSX
WEDNESDAY: Mortgage applications, CPI*, Treasury int’l capital, housing market index, Beige Book; Earnings from Bank of America, BlackRock, PepsiCo, US Bancorp, American Express, Ebay, IBM
THURSDAY: Fed’s Fisher speaks, jobless claims, housing starts*, industrial production*, Philadelphia Fed survey, natural gas inventories*, oil inventories*, Fed’s Kocherlakota speaks, Fed’s balance sheet/money supply, US debt ceiling deadline, Windows 8.1 available, Dell annual shareholder mtg; Earnings from Goldman Sachs, Verizon, Google, Capital One, Chipotle Mexican Grill
FRIDAY: Leading indicators; Earnings from General Electric, Schlumberger, Morgan Stanley, Honeywell

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