Analysis & Opinion

* Dow, S&P 500 coming off worst month since Jan 2014

* Exxon earnings fall less than expected

* ISM manufacturing index misses forecasts

* Indexes up: Dow 0.2 pct, S&P 0.4 pct, Nasdaq 0.1 pct (Updates to afternoon trading)

NEW YORK, Feb 2 (Reuters) — U.S. stocks rose in a volatile session on Monday as better-than-expected results from Exxon lifted energy shares and offset disappointing readings on consumer spending and the manufacturing sector.

While the data pointed to weakening economic conditions, major indexes are coming off their worst monthly performance in a year, leading many traders to seek out bargains in beaten-down sectors.

The S&P 500 moved between positive and negative territory repeatedly, with energy strength a consistent theme. The sector rose 1.4 percent after Exxon Mobil reported a smaller-than-expected profit drop of 21 percent. Shares of the Dow component rose 1.1 percent to $88.35.

Crude oil was extremely volatile, moving between gains of 4.8 percent and losses of 3.3 percent. It last traded up 1.5 percent, despite a strike at U.S. refineries that could boost crude supply.

The day’s swings continue recent volatility. The S&P fell more than 1 percent in three of the past four sessions and market swings have gotten larger of late. Over the past 14 days, the S&P has moved an average of 30 points between its session high and low. On January 9, that average was under 20.

Fundamentals still look strong, but earnings are really coming in under expectations, which is creating a general concern that is leading to heavy volatility, said James Liu, global market strategist for JPMorgan Funds in Chicago. We got used to good earnings growth and data and now we’re facing the first real test of that sentiment not always being true.

The Institute for Supply Management said the pace of growth in the U.S. manufacturing sector slowed more than expected in January.

U.S. consumer spending recorded its biggest decline since late 2009 in December, with cheaper gas not translating to higher activity. The Commerce Department said consumer spending dropped 0.3 percent, the largest drop since September 2009.

The big question is why we’re not seeing a stronger consumer. It may take a while for the impact of lower oil to work its way through the system, Liu said.

Solar power companies were among the strongest of the day after China said it aims to install 15 gigawatts of solar power capacity this year, 43 percent more than it added in 2014. First Solar climbed 6.1 percent to $44.89, while Canadian Solar rose 4 percent to $21.21.

At 12:40 p.m. (1740 GMT) the Dow Jones industrial average rose 34.58 points, or 0.2 percent, to 17,199.53, the S&P 500 gained 7.8 points, or 0.39 percent, to 2,002.79 and the Nasdaq Composite added 6.14 points, or 0.13 percent, to 4,641.38.

Advancing issues outnumbered declining ones on the NYSE by 1,857 to 1,144, for a 1.62-to-1 ratio; on the Nasdaq, 1,431 issues rose and 1,194 fell, for a 1.20-to-1 ratio favoring advancers.

The benchmark S&P 500 was posting 2 new 52-week highs and 6 new lows; the Nasdaq Composite was recording 17 new highs and 66 new lows. (Editing by Nick Zieminski)