The ISM manufacturing report last week also showed the sector approaching contraction, while the ISM nonmanufacturing data Monday held in expansion territory, at 56.9.
"Whether this is a soft patch or something with longer legs, it casts a shadow on the market, keeps any extended rebound in stocks (limited) before we get confirmation," Valeri said. "Technically, the market appears to have tested the bottom twice."
The S&P 500 rallied 1.8 percent to close at 1,987 Monday, posting its first five-day win streak for 2015.
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"For a successful retest we'd have to retake the (Sept. 16) closing high 1,995, said Daniel Deming, managing director at KKM Financial. "Ideally you'd want to see a higher high. It's still too soon but at least defined the range for the new level."
The S&P remained 3.5 percent lower year-to-date, while the Nasdaq gained to close at 4,781, or about 1 percent higher for the year. The Dow Jones industrial average surged 304 points to close at 16,776 but is still nearly 6 percent lower for 2015.
All three major averages closed within 10 percent of their 52-week highs, or out of correction territory.
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As stocks soared, the VIX edged lower to close below 20 for the first time since Aug. 20.
"I think we'd have to see some good earnings and no other bad economic (data) to keep it there," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
He said after two days of solid gains, stocks may have little reason to move much higher or lower Tuesday. "My best guess is we float around where are right now," he said. "The market's in search of an upside or downward catalyst."
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Earnings season picks up slowly with PepsiCo before the open Tuesday. The unofficial start to earnings season comes Thursday with Alcoa's earnings after the bell.
S&P Capital IQ expects a decline of 4.8 percent for third-quarter earnings.
"You'll get your requisite beats," said Ben Pace, chief investment officer at HPM Partners. He said earnings overall "may be a little worse" than previous quarters "because energy prices did continue to come down in the third quarter."
Crude oil settled higher at $46.26 a barrel Monday, holding within the $44-to-$49.20 range it has held since Aug. 27. Many analysts say the restricted price movement indicates oil may have put in a bottom and support continued gains in energy stocks.
The energy sector closed up 2.85 percent Monday, posting its first five-day winning streak since Oct. 21, 2014, and closed above its 50-day moving average for the first time since May 22.
Amid a light economic calendar, Wall Street will also keep an eye on political developments both in the U.S. and abroad, analysts said. On Monday the U.S. and 11 other nations reached an agreement on the historic Trans-Pacific Partnership, a trade deal that must still pass Congress.
The August trade deficit, due at 8:30 a.m., ET, is the only key data point out Tuesday.
The report is not expected to move markets but many analysts do forecast an increase in the deficit.
"The real trade deficit, (which counts against real GDP growth), likely hit its worst level in over seven years in the third quarter," David Kelly, chief global strategist at JPMorgan Funds, said in a note. "Second, the economy is now experiencing an inventory drag as companies try to work down excessive stockpiles. Wholesale inventory data due out on Friday should confirm that this is happening."
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In other news, San Francisco Fed President John Williams is scheduled to speak at 5:30 p.m., ET. Tuesday. The Treasury also auctions three-year notes at 1 p.m. ET.
Correction: An earlier version of this story misstated the source of the earnings growth projections. It was S&P Capital IQ.