Stocks had one of their best October performances, despite a choppy day that ended with the major indexes largely flat, as investors prepared for a busy week that includes the mid-term election, the Fed's policy setting meeting, and more earnings releases.
The Dow Jones Industrial Average rose 4.54 points, or less than 1 percent, to close at 11,118.49. For the month, the Dow rose 330.44 points or 3.06 percent, its best October performance since 2006.
The top performers on the Dow for October were Walt Disney , up 9.1 percent for the month, and Microsoft , up 8.9 percent. The worst performers were Bank of America and 3M .
The S&P 500 fell 0.52 percent, or 0.4 percent, on Friday to close at 1,183.26. For the month, the S&P 500 rose 42.06 points, or 3.7 percent. The broad market index recorded its biggest percentage gain for October since 2003.
The top performers on the S&P for October were King Pharmaceuticals , up 42 percent, and Monster Worldwide , up 39 percent. The worst performers were Apollo Group and Coca Cola Enterprises .
The Nasdaq rose 0.4 points, to close at 2,507.41. For the month, the tech-heavy index rose 82.02 points or 1.1 percent, the biggest percentage gain for October since 2003.
Materials was the top performing sector for the month, up 6.57 percent, followed closely by technology, up 6.45 percent.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 21.
The market was driven by the direction of the dollar for much of the month. For October the dollar index lost nearly 2 percent.
Stocks traded in a narrow range on Friday, but did not appear to be affected by news of suspicious packages being shipped from Yemento religious sites in Chicago.
The market's lackluster activity on Friday instead reflected the busy week ahead, as investors wait for results from the Nov. 2 election, the Federal Reserve's policy making meeting on Wednesday and the October unemployment report on Friday, said J.J. Kinahan, chief derivative strategist at TD Ameritrade.
The market was also dominated by earnings news on Friday, as it had been much of the week. With 335 S&P 500 companies having reported so far, some 77 percent have beaten earnings estimates. That is just shy of the record beat rate of 79 percent in the third quarter of 2009, according to Thomson Reuters data.
Merck fell after beating profit expectations, but disappointing investors with revenue results. The drug maker had taken a nearly $1 billion charge related to a government investigation of its Vioxx drug.
Chevron declined after the oil company reportedprofits that disappointed investors, although the company's revenues were stronger than expected.
And First Solar shares tumbled more than 8 percent as investors focused on the solar company's comments that margins may be hurt in 2011, despite beating expectations on both revenues and profits. Meanwhile, at least two brokerages raised their price targets on the firm.
Genworth Financial plunged nearly 10 percent after the insurer insurer's results were hit by large losses in mortgage insurance, largely from business in Florida.
Meanwhile, Microsoft shares were among the few gainers on the Dow after reporting surprisingly strong profits and salesin its core Windows and Office software Thursday, as well as sales of the video game Halo. In addition, at least three brokerages raised their price targets on the firm.
Cigna fell despite beating profit expectations, and raisings its full-year outlook.
Monster Worldwide soared more than 25 percent to top of the S&P 500 after the online employment service reported bookings for the third-quarter that were much better than expected. In addition, at least three brokerages upped their ratings and price targets for the stock.
And Estee Lauder climbed more than 10 percent after beating expectations for both profits and sales, and issuing a brighter outlook for the year.
In other news, Potash shares are higher after news the fertilizer company, which is the target of a hostile takeover bid by BHP Billiton , has spoken with 15 other companiesto learn if there is interest in an alternative deal. Canadian authorities will complete their review of the bid on Wednesday.
Fluor resumed trading after a brief halt Friday after delivering news that its joint venture received an adverse legal ruling, and after reporting a charge of about $95 million for the third quarter.
Halliburton shares were up slightly Friday, after falling considerably the day before after a White House panel found the company used flawed cement in the Gulf of Mexico oil well.
Seagate Technology rose despite reports that Kohlberg Kravis Roberts is considering backing out of a deal to take the computer firm private along with TPG Capital and Bain Capital, fellow private equity firms.
And Lionsgate sued corporate raider Carl Icahn, charging him with violating federal securities laws in his attempt to takeover the studio, by interfering with potential merger partners.
AIA Group, a spin-off of AIG , rose more than expected after its initial public offering in Hong Kong. Meanwhile, MetLife boosted its outlook for what it expects to receive in earnings from its acquisition of Alico from AIG. MetLife's shares fell after reporting lower-than-expected resultson Thursday.
Oil fell below $81 barrelamid a stronger dollar. Meanwhile, gold rose above $1,355 an ounce.
As for next week, the markets have accounted for the possibility of the Republicans taking over a majority in the House of Representatives, while the Senate remains in Democratic hands, said Kinahan at TD Ameritrade.
"The only thing that can come out of it now is surprises," he said. "If it comes out as expected, I would expect the market’s reaction to be muted."
The wild card is the Tea Party. If elected, candidates who ran as upstart, Tea Party candidates would be unlikely to fall in step with the Republican party.
"Nobody is sure how they are going to fit into the picture from a Republican point of view," said Doug Roberts, chief investment officer at ChannelCapitalResearch.com
The other big questions weighing on the market were whether the Fed will announce a plan to buy assets to boost the economy when it meets Wednesday? And if they did. what would be the size and scope of the program? Estimates have varied from an initial round of a $100 billion or so, followed by similar smaller purchases over time, to an initial purchase of $500 billion or more.
Roberts said the Fed is likely to keep pumping money into the system until it is confident employment is turning around and the economy is roaring back to health.
"For the next year and half, they will aggressively pump money into the economy," he said.
The market had plenty of economic news to digest on Friday, including a report that consumer sentiment fell in October to its lowest level since November 2009The final October reading on consumer sentiment from the Thomson Reuters/University of Michigan was 67.2, down from 68.2 the previous month.
The Chicago Purchasing Managers' Index for October was 60.6 in October, rising from the previous month's reading of 60.4 and beating expectations.
Also, U.S. GDP rose at a 2 percent ratein the third quarter, the Commerce Department reported, in line with expectations.
The third-quarter employment cost index, meanwhile, rose 0.4 percent, slightly less that the consensus forecast of 0.5 percent.
On Tap Next Week:
MONDAY: Personal income and spending, ISM manufacturing index, construction spending; before-the-bell earnings from Humana and Lowes; after-the-bell earnings from Anadarko Petroleum
TUESDAY: Election Day, auto sales, FOMC meeting begins; before-the-bell earnings from BP, Pfizer, Kellogg and MasterCard; after-the-bell earnings from Electronic Arts
WEDNESDAY: FOMC announcement; MBA mortgage applications, Challenger job-cut report, ADP employment report, Treasury refunding announcement, factory orders, ISM non-manufacturing index, oil inventories; before-the-bell earnings from Time Warner, Aetna, CVS; after-the-bell earnings from Chesapeake Energy, News Corp, Prudential Financial and Transocean
THURSDAY: Chain-store sales, BoE announcement, jobless claims, productivity and costs, ECB announcement; after-the-bell earnings from Kraft and Starbucks
FRIDAY: Pending home sales index, non-farm payrolls report, consumer credit; Kansas City Fed President Hoenig speaks; before-the-bell earnings from Toyota; after-the-bell earnings from Berkshire Hathaway
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