The Dow industrials moved higher, backing away from bear-market territory, as oil prices pulled back.
"I think that the market is in a secular bear market," Steven Lehman, a fund manager for Federated Market Opportunity Fund, told CNBC. "This was not a normal cycle –- It was a Golden Era built mainly on debt ... the golden era is over but the debt remains," Lehman said.
"Economic and earnings disappointments lie ahead at a time when equity valuations are very high," Lehman said.
Lehman is currently long on gold and short technology and emerging markets.
"I think technology analysts and strategists in general have been much too optimistic about technology-sector earnings and growth prospects, particularly in the international operations," Lehman explained. "We think that the tech sector has quite a bit further to fall."
Asian stocks closed mostly lower, with skyrocketing oil prices remaining the key theme, while in Europe, shares fell as euro-zone inflation came in at a record 4 percent for June, according to initial estimates.
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Oil pared its gains slightly, trading between $140 to $141 a barrel around the opening bell, as the dollar remained weak and tensions between Israel and Iran fueled anxiety.
The Chicago Federal Reserve reported that its gauge of Midwest business activity contracted in June, the fifth straight month of decline, but the drop was less severe than expected. Manufacturing in the Texas area slowed in June.
The Chicago and Dallas reports are the last regional reports ahead of the national manufacturing reading from the ISM, due out on Tuesday. Among the other closely-watched regional reports, manufacturing activity in the Philadelphia area and New York regionslowed more than expected.
It's a shortened trading week due to the Fourth of July holiday on Friday but the week is big on data. Due out on Thursday is the June jobs report.
The current economic downturn is also hitting the wealthy according to a new CNBC/Portfolio.com “Wealth in America” report, spelling more gloom for the consumer sector.
Americans are driving less, entertaining less, vacationing less and spending less on groceries, according to the report conducted for CNBC and Portfolio magazine.
General Motors shares , already hovering at a more than 50-year low, slipped further ahead of June U.S. sales reports from major auto makers, due out on Tuesday. This will be one of the most closely watched reports: It may be the month that Toyota eclipses GMas the leader in U.S. auto sales.
In an otherwise quiet day for earnings reports, H&R Block, the nation's No. 1 tax preparer, said it swung to a quarterly profitfrom a loss a year earlier as the weak dollar helped the company cash in on exchange rates from its business in Canada. The results beat expectations -- H&R Block posted a profit of $2.11 a share, ahead of analyst estimates of $2.03 -- as did the company's guidance.
Wal-Mart Stores said Sunday the company will begin replacing logos on the front of its U.S. stores with a new design beginning this fall.
The revamped logo comes as Wal-Mart continues to tweak its image after facing criticism from union-led groups and local communities across the nation opposed to big-box store developments.
General Electric may be in the spotlight today after Lehman Brothers' Robert Cornell said GE shares "could be near a bottom," citing the fact that, historically, GE tends to trough at a 25 percent discount to the S&P 500 and are currently at 18 percent.
ArcelorMittal Chairman and CEO Lakshmi Mittal is looking at entering the takeover battle for the Rio Tinto mining group, the Financial Times reported on Monday, quoting people familiar with the situation.
Mittal, main shareholder at ArcelorMittal, was keen to secure larger supplies of iron ore, said the newspaper.
Also, eBay suffered another legal blow as a court in France ordered the online auction service to pay $61 million to luxury goods group LVMH for allowing sales of counterfeit items on the site.
MONDAY: H&R Block earnings after the bell
TUESDAY: Auto sales; ISM manufacturing index; construction spending; Fed's Lockhart speaks; Earnings from Constellation Brands, Apollo Group
WEDNESDAY: Weekly mortgage applications; factory orders; crude inventories; earnings from Family Dollar
THURSDAY: Jobless claims, Jobs report, ISM services index; Stock market closes at 1pm ET and bond market closes at 2pm ET
FRIDAY: All major U.S. markets closed for Fourth of July holiday
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