NEW YORK (TheStreet) -- Stocks bounced back into positive territory on Monday as a rally among energy names offset weaker-than-expected U.S. manufacturing activity in January. Markets had turned lower earlier after January's ISM reading indicated slower-than-expected growth, triggering fears the domestic economy isn't as strong as believed.

The S&P 500 was up 0.28%, the Dow Jones Industrial Average added 0.17%, and the Nasdaq gained 0.1%. 

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Oil had retraced losses that occurred after 3,800 refinery employees represented by the United Steelworkers union went on strike for their second day after failing to agree to new labor contracts. The group accounts for 10% of U.S. refining capacity. West Texas Intermediate crude was flat at $48.21 a barrel. 

Exxon Mobil (XOM) was up more than 1% after beating fourth-quarter profit expectations. The oil giant earned $1.56 a share over the quarter, 22 cents higher than expected. However, revenue down 20% highlighted how tanking oil prices have undercut the industry's topline growth. 

Chevron (CVX) , Schlumberger (SLB) , Halliburton (HAL) , and ConocoPhillips (COP) were also higher, while the Energy Select Sector SPDR ETF (XLE) jumped 1%.

The January ISM manufacturing index slipped to 53.5 from 55.5, its worst level in a year. Though above the expansion level, the reading was below estimates of 54.5.

U.S. production levels in January were flat month over month at 53.9, according to the PMI manufacturing index flash reading. Economists had expected a slightly higher reading of 54. Construction spending in December climbed 0.4% to $982 billion, lower than an expected 0.7% increase.

Personal incomes gained 0.3% month on month in December, in line with expectations. Personal spending dropped 0.3%, slightly wider than a forecast decline of 0.2%. Investors will get a chance to see how wage growth fared in the nonfarm payrolls report for January that is due Friday. Average hourly wages fell 0.2% in December.

Asian markets closed lower with China's Shanghai Composite leading the losses with a 2.6% drop. The HSBC manufacturing purchasing managers index showed China's factory activity edging to 49.7 in January, barely above the 49.6 reading in December. The measure remains just under the 50 mark that signals contraction, sparking worries over the health of the world's second-largest economy. 

China's official PMI reading slid to 49.8 in January from 50.1 a month earlier, its first fall into contraction since September 2012.

European markets were mixed. France's CAC 40 slipped 0.06%, Germany's DAX was up 0.49%, and London's FTSE 100 gained 0.09%.

European markets have been jittery after Greece's anti-austerity party won an election last week that triggered fears the country's bailout package could be compromised. The 240 billion euro bailout, sponsored by the European Central Bank and the International Monetary Fund, expires at the end of the month, though Prime Minister Alexis Tsipras assured that the government would repay its debts.

Eurozone manufacturing PMI climbed to 51 in January, slightly higher than December's 50.6 reading, but still treading the line between contraction and expansion. UK's manufacturing PMI was looking healthy, climbing to 53 from 52.7.

Guess (GES) shares were down more than 4% after Evercore ISI downgraded the retailer to a "sell" from "hold."

Shake Shack (SHAK) shares retraced some of the explosive gains made after going public on Friday. The burger chain's stock more than doubled to $45.90 in its market debut. 

Companies reporting earnings Monday include Owens-Illinois (OI) , Anadarko Petroleum (APC) and Cliffs Natural Resources  (CLF) .

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--Written by Keris Alison Lahiff in New York.