"I don't expect a full deal by the weekend but I do expect [them] to continue to talk," said Ristuben. "In general, we think equity earnings are going to be good—in the 4 to 5 percent range—we're actually quite conservative. But we think that's enough to take equities forward because cash and bonds don't look like they're going to offer very good returns over the next year."
With a partial government shutdown in its 11th day, House Republicans were prepared to offer a new deal featuring both an increase in the debt limit and an end to the government shutdown in return for spending cuts, according a report from the AP.
The AP also reported that Senate Republicans have started work on a bipartisan solution to the debt ceiling and government shutdown crises after a meeting with President Obama.
(Read more: Fire 'em! Majority want to toss entire Congress: Poll)
"This has been a powerful bull market and my sense is that most investors are seeing this as a glass half full … so at the very least, we'll get a six-week extension," said Uri Landesman, president of Platinum Partners.
Among earnings, JPMorgan topped Wall Street expectations. But overall, the bank posted a quarterly loss due to legal expenses, but it expects those costs to eventually abate and normalize. Shares were higher for most of the session, but closed nearly flat.
And Wells Fargo posted quarterly earnings that hit a record as loans and deposits surged during the period.
(Read more: Bove: Don't worry about this bank)
Other major financials including Citigroup, Bank of America, Goldman Sachs and Morgan Stanley are slated to post results throughout next week.