Crude oil started February with another selloff, but this time, the stock market didn't follow suit. At least, not altogether
While crude's 6% slide dragged down energy stocks, mild gains elsewhere helped ease the impact. The S&P 500 slipped 0.04%, rebounding from a steep decline earlier in the day, the Dow Jones Industrial Average fell 0.1%, and the Nasdaq gained 0.14%.
The day's performance buoyed investors' hopes after the worst January since the financial crisis.
"With the technical backdrop improving after the mid-January plunge, bulls should welcome what we are seeing with respect to sentiment among equity-only option buyers," said Todd Salamone, a senior vice president at Schaeffer's Investment Research. "The panic selling of mid-January is over, signaling a change in sentiment from extreme fear that could be supportive of stocks in the weeks ahead."
Though the S&P 500 may have found its bottom around 1,800, that doesn't necessarily signal a big rebound. The S&P 500 is currently trading at 1,939 and it could stay range-bound for the remainder of the year.
"At most, we could justify 10% above [our value floor of 1,850] over the course of the year," Phil Davis, trader and founder of PSW Investments, told TheStreet. "That's assuming China doesn't blow up, Japan doesn't implode, the U.K. stays in the euro. There are a lot of little factors that could tilt things badly."
Weaker data from China exacerbated worries over demand for crude oil on Monday. China's factory activity fell to a three-year low, dropping further into contraction territory for its sixth straight month. West Texas Intermediate crude oil fell 6% to $31.62 a barrel. Prices have fallen 16% since the beginning of the year.