Stocks returned to positive territory despite the latest reading on manufacturing activity showing growth hovering just above the line dividing expansion from contraction.
The S&P 500 was up 0.36%, the Dow Jones Industrial Average added 0.43%, and the Nasdaq rose 0.11%.
Manufacturing growth in April fell to a reading of 50.8, according to the ISM Manufacturing Index. Economists expected the measure to fall at a slower pace to 51.5 after a reading of 51.8 in March. Both production and new orders softened after a strong showing in March. The employment index remained in negative territory, indicating further manufacturing job losses on the horizon.
"The prospect of a renewed wobble in U.S. manufacturing comes at a difficult time for the wider economy," said David Tulk, head of global macro strategy at TD Securities. "First-quarter growth was quite subdued and all eyes are focused on the ability of activity to improve heading into the second quarter. This release, among others, challenges this narrative and points to continued sluggishness in the U.S. economy."
Construction spending in the U.S. rose just 0.3% in March, slower than an expected 0.5% increase. Spending rose 1% in February.
A final read on Markit's April U.S. manufacturing PMI was unchanged at 50.8. The index had fallen from 51.5 in March. The unchanged reading suggests "there's no end in sight to the current downturn in manufacturing activity," Markit analysts said in a release.
Halliburton (HAL - Get Report) and Baker Hughes (BHI) dominated business headlines on Monday after calling off their $28 billion merger on intense scrutiny from antitrust regulators. The Department of Justice confirmed the news, applauding the abandonment of the deal as "the only result that could adequately protect American consumers." The deal would have combined the second- and third-largest oilfield services firms in the world.
Baker Hughes announced plans to cut $500 million in costs and repurchase $1.5 billion of shares and $1 billion in debt. The oilfield services company plans to fund its buyback program with the $3.5 billion breakup fee it receives from Halliburton.
Halliburton shares rose 2.9%, while Baker Hughes was down 2.6%.
International Paper (IP - Get Report) agreed to purchase Weyerhaeuser's (WY - Get Report) pulp business in a deal worth $1.9 billion. The acquisition includes five pulp mills and two converting facilities and should generate annual synergies of $175 million in under three years. Weyerhaeuser shares rose 0.4%.
GNC (GNC - Get Report) jumped 4% after suggesting it is considering a sale as it reviews its operating plan. The vitamins company is working with Goldman Sachs and Wachtell, Lipton, Rosen & Katz as it evaluates its options.
Apollo Education Group (APOL) rose 8% after private-equity firm Apollo Global Management (APO - Get Report) raised its takeover bid to $10.50 a share from $10. The deal is now valued at $1.14 billion. The University of Phoenix's online college company delayed a shareholder vote on the deal last week after major stakeholders criticized the offer as too low.
Groupon (GRPN - Get Report) fell 6% after RBC Capital downgraded its stock to underperform from sector perform and cut its price target to $3 from $4. Analysts said they are seeing few signs of a turnaround in fundamentals at the online coupon site.
Benchmark indexes fell more than 1% last week after Apple (AAPL - Get Report) suffered its worst three-day stretch since early 2013. The world's largest company reported its first quarterly sales decline in 13 years in its first quarter.
Japanese stocks slid more than 3% overnight as the Bank of Japan's inaction on fresh stimulus continued to disappoint investors. The central bank had widely been expected to increase its asset-purchase program. Japanese markets were closed Friday for a national holiday and had not yet had the chance to fully digest the news. The yen hit an 18-month high against the U.S. dollar.
Crude oil prices were in retreat after an increase in Middle Eastern output overshadowed declining production in the U.S. Crude production from Organization of Petroleum Exporting Countries climbed to 32.64 million barrels in April. Russia, the biggest exporter outside OPEC, also increased monthly crude for seaborne exports by more than 7% in April.
West Texas Intermediate crude oil was down 1.6% to $45.18 a barrel.
In earnings news, Sysco (SYY - Get Report) added nearly 4% after topping analysts' earnings estimates in its third quarter thanks to lower food costs. The business-to-business food services company earned an adjusted 46 cents a share in its recent quarter, besting expectations by 4 cents. Sales of $12 billion came in above forecasts of $11.9 billion.