Stocks rose on Friday, with the S&P 500 posting a fourth weekly gain, as a better-than-anticipated report on manufacturing fed thinking of likely monetary-tightening ahead by the Federal Reserve.
The bond market in particular is starting to adjust "certainly not this year, but maybe next, to an actual Fed taper," Paul Nolte, managing director at Dearborn Partners, said of rising borrowing costs, which are still low by historical standards.
News reports of a shooting at Los Angeles International Airport did not seem to rattle the equities market. "It's been a lackluster Friday for the most part," said Stephen Carl, head equity trader at the Williams Capital Group.
Rising 0.5 percent for the week, the Dow Jones Industrial Average advanced 69.80 points, or 0.5 percent, to 15,615, 55, with Boeing and JP Morgan Chase pacing gains that included 25 of its 30 components.
Boeing's gains came a day after the Chicago-based plane maker said it would increase production of its 737 jets to 47 a month by 2017. It currently makes 38 of its top-selling planes.
Chevron led blue-chip losses after the oil producer reported a decline in third-quarter profit due to reduced refining margins, while oil and gas production rose but stayed short of its target.
The S&P 500 rose 5.1 points, or 0. percent, to end at 1,761.64, up 0.1 percent from last Friday's close. Industrials paced sector gains and energy fared the worst among the S&P's 10 major industry groups. The Nasdaq erased losses to turn positive in the final hour of trade, adding 2.34 points, or 0.1 percent, to 3,922.04, leaving the technology-laden index down 0.5 percent for the week.
"Earnings are okay, and as a whole have beaten lowered expectations. Revenues are not fabulous, so it's still managing expenses, which companies are doing a good job of. Top-line growth is a lot harder to come by in the current environment," said Nolte.
With third-quarter earnings in from 74 percent, or 355 companies in the S&P 500, 68.5 percent have reported earnings above consensus estimates, while 53.3 percent have reported revenue that beat estimates, according to Thomson Reuters.
Making its market debut on the New York Stock Exchange, the Container Store rallied.
Decliners remained just ahead of advancers on the New York Stock Exchange, where 810 million shares traded. Composite volume approached 3.7 billion.
On the New York Mercantile Exchange.Crude futures dipped $1.77 to $94.61 a barrel and gold futures lost $10.50 to close at $1,313.20 an ounce.
The dollar gained against the currencies of U.S. trading partners and borrowing costs increased, with the yield on the 10-year Treasury note rising 6 basis points to 2.62 percent.
On Friday, Philadelphia Fed President Charles Plosser told CNBC that the central bank "clearly missed" a chance to start reducing its $85-billion-a-month asset purchasing program in September. The Fed did not make a move at its latest meeting this week, and most economists believe any tapering moves are off the table until early 2014.
In a speech Friday, St. Louis Federal Reserve President James Bullard said the chances of Fed trimming its bond buys increase along the with improvements in the labor market. However, the central banks wants "reassurance that any progress made in labor markets will stick," he added.
The CBOE Volatility Index (VIX), a measure of investor uncertainty, fell to 13.23.
Stocks hit session highs as the Institute for Supply Management's manufacturing index came in at 56.4 in October beat estimates of a drop to 55.0 from 56.2 in September.
"The report confounds expectations of a decline on account of the government shutdown, corroborates the earlier Chicago reading and justifies the Fed's recent failure to signal deepening fears surrounding fiscal woes," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co., noted in emailed comments.
Ahead of the ISM report, Markit reported the growth in U.S. manufacturing fell to a one-year low in October.
"I'm fine with the economy at this point. It's supportive of economic growth, as tepid as it is," said Nolte at Dearborn Partners.
—By CNBC's Kate Gibson
Coming Up Next Week:
Monday: ISM New York, factory orders, durable goods, earnings from HSBC, CME Group, Vulcan Materials, Tenet Healthcare
Tuesday: ISM non-manufacturing index, earnings from AOL, Liberty Interactive, Telsa Motors
Wednesday: Leading economic indicators, earnings from Toyota, Icahn Enterprises, Time Warner
Thursday: weekly jobless claims, gross domestic product, consumer credit, earnings from Apache, Tim Hortons, Wendy's, Disney, Groupon
Friday: nonfarm payrolls, personal income and spending, Core PCE price index,Reuters/UMich consumer sentiment, earnings from Leap Wireless, Tesoro Logistics
More From CNBC.com: