US STOCKS-Wall Street gains on optimism over fiscal deal
* U.S. lawmakers begin last-ditch effort on debt ceiling
* About 6.6 percent of S&P 500 companies to report results
* Bank of America posts profit, credit loss provisions dip
* Indexes: Dow up 0.5 pct; S&P up 0.6 pct; Nasdaq up 0.6 pct
NEW YORK, Oct 16 (Reuters) - U.S. stocks rose on Wednesday amid cautious optimism that U.S. politicians would strike a last-minute deal to prevent the country from defaulting on its debt, an event that could roil markets and economies worldwide.
Among early gainers, shares of Yahoo rose 1.7 percent to $34.00, a day after the company reported third-quarter earnings that were slightly above forecasts by analysts.
Bank of America Corp reported a third-quarter profit of $2.22 billion, compared with a loss a year earlier, as provisions for credit losses fell. Shares were up 1.9 percent at $14.51.
In Washington, the U.S. Senate prepared for a last-ditch effort to avoid a historic lapse in the government's borrowing authority, a breach that President Barack Obama has said could lead to default and deliver a damaging blow to the global economy. Senators are scheduled to return at noon (1600 GMT).
"We are seeing pretty heavy buying in early trade and we've gotten back what we lost yesterday already. There is optimism that there will be a deal in the very end," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.
The Dow Jones industrial average rose 79.25 points, or 0.52 percent, to 15,247.26, the S&P 500 gained 10.13 points, or 0.6 percent, to 1,708.19 and the Nasdaq Composite added 23.06 points, or 0.61 percent, to 3,817.071.
The gains come after markets were rattled by a warning from Fitch Ratings late Tuesday that it could cut the sovereign credit rating of the U.S. from AAA, citing political brinkmanship over raising the federal debt ceiling.
The corporate earnings season has gotten off to a good start as a majority of companies has met or beat estimates, with an average surprise of 4.7 percent so far, said Jonathan Golub, chief U.S. market strategist at RBC Capital Markets in New York.
He said 40 companies representing 12 percent of the S&P 500's market capitalization have reported so far in the season.
Over the course of the day, 22 companies representing 6.6 percent of the S&P 500 index will report results, including IBM , American Express and eBay after the close of the market.
"As expected, cyclical sectors have delivered better relative results than less economically sensitive names, with financials, industrials, discretionary, materials and technology all posting positive surprises," Golub said.
Stanley Black & Decker Inc shares were down 14 percent at $76.84 after the tool-maker cut its guidance for the year amid weakening emerging markets and an expected hit from the U.S. government shutdown.
BlackRock Inc, the world's largest money manager, said its third-quarter profit grew 15 percent amid strong global demand from its retail and institutional clients. The stock was up 2.1 percent at $288.11.