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U.S. stocks closed narrowly mixed Monday, the first trading day of February, despite declines in oil prices and soft China manufacturing data.
Hopes of more accommodative Fed policy following Fed Vice Chair Stanley Fischer's afternoon remarks also helped the major averages end well off session lows.
The Nasdaq composite closed higher as Facebook extended recent gains and shares of Alphabet rose ahead of its earnings report, due after the close.
The major averages pared initial losses of more than 1 percent to turn higher in the last hour of trade, but the Dow Jones industrial average and the S&P 500 closed a touch lower.
Utilities closed 1 percent higher to lead S&P 500 advancers, followed by telecommunications.
"The market has a real defensive feel to it," said Marc Chaikin, CEO of Chaikin Analytics.
"I think it's a way to put money to work in high yielding stocks and not having to deal with the volatility around earnings reports," he said.
The Dow Jones industrial average closed about 17 points lower. The index earlier added more than 40 points, more than recovering from a 150-point intraday decline following another sub-50 print in ISM manufacturing. 3M, Goldman Sachs and energy firms Exxon Mobil andChevron were the greatest weights on the Dow, while Boeing andAmerican Express were the top contributors to gains in the close.
The Dow transports reversed an earlier decline close up 0.9 percent asJetBlue led advancers.
U.S. crude oil futures settled at $31.62 a barrel, down $2, or 5.95 percent, for its worst daily loss since Sept. 1. Looking at the last 15 days, the correlation between U.S. crude oil futures and the S&P 500 fell from 0.96 to 0.6 Monday, according to analysis using the thinkorswim platform.