Stocks Get Happy on Optimism for Debt Limit Deal

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NEW YORK ( TheStreet) -- U.S. stocks erased early declines to close in the green on Monday as a White House official said President Barack Obama and Vice President Joe Biden were meeting in the afternoon with House and Senate leaders from both major parties about the nation's borrowing limit and the continuing government shutdown.

"The president will also reiterate our principles to the leaders: we will not pay a ransom for Congress reopening the government and raising the debt limit," the White House official said in an email to reporters. "The president continues to urge Congress to pass a bill that raises the debt ceiling and lends the certainty our businesses and the economy needs."

The S&P 500  added 0.41% to 1,710.18 after falling as much as 1.2%  while the  Dow Jones Industrial Average  gained 0.42% to 15,301.07.  The Nasdaq jumped 0.62% to 3,815.27. 

Also boosting stocks was a report that Senate Majority Leader Harry Reid privately offered Senate Minority Leader Mitch McConnell a deal to extend the U.S. debt limit until next year and to reopen the government until mid-to-late December, according to Politico citing several sources familiar with the discussions.

"We believe this foolish game of chicken shows Washington lawmakers have a naïve sense of the economy and global markets," Craig Johnson, a Minneapolis-based senior technical research analyst at Piper Jaffray, said in a note. "We suspect markets will experience heightened volatility this week as the saber-rattling in Washington intensifies ahead of the projected debt ceiling limit being reached on Thursday."

Netflix was the top performer on the  S&P 500  as reports emerged that the movie- and television-streaming company was in talks to add its service to set top boxes of U.S. cable companies . Shares of the company popped more than 7.5%.

Expedia  was the largest percentage decliner on the S&P 500  on Monday after the online travel services company was downgraded to "hold" from "buy" at Deutsche Bank with a $51 price target on concerns about recent management changes at the Hotels.com unit as well as execution issues. Shares dropped nearly 6.5%

Delta was off more than 1% and Alaska Air  was up more than 1.5% as tensions rose between the two airlines. The partners are increasingly becoming rivals battling for control of Seattle Tacoma International Airport, one of the two most valuable West Coast hubs, with the bloodiest battleground appearing likely to be the Seattle-San Francisco route where service is slated to expand next year to approximately 28 daily flights each way.

Consol Energy  increased 0.63% to $38.41 as the Wall Street Journal reported that the largest U.S. coal producer by market value is looking for ways to sharply cut down it coal holdings to focus more on natural gas by splitting up its coal and gas assets and having them trade separately.