NEW YORK (CNN/Money) - After ending the day mixed and closing out the month higher for the first time since March, U.S. stocks face another test Friday with the release of more data on the job market and manufacturing activity.

The Dow Jones industrial average (down 30.38 to 8397.03, Charts) closed down about 0.4 percent Thursday. But despite a lower day, it was the best October ever for the Dow. Down about 50 points so far on the week, the Dow has gained 11 percent, or 800 points, since the beginning of October. With the index down slightly on the week, Friday trading will determine whether the Dow will end higher for the fourth consecutive week.

The Nasdaq composite (up 3.02 to 1329.75, Charts) and Standard & Poor's 500 index (down 4.95 to 885.76, Charts) were little changed Thursday, with the Nasdaq ending slightly higher and the S&P closing a bit lower.

This month, the first one since March to end in gains for all three indexes, has been the best for the Dow since January 1987, according to Ned Davis Research. The Nasdaq gained 13 percent in October, rising 19 percent from its monthly low.

Some investors hung by the sidelines awaiting additional key data on the state of the economy to be released Friday, including the monthly jobs report for October and the Institute of Supply Management's gauge of manufacturing activity.

Economists expect the unemployment rate jumped to 5.8 percent in October from 5.6 percent in September, with no change in nonfarm payrolls, and forecast the manufacturing index dropped slightly to 48.9 in October from 49.5 in September, according to Briefing.com.

Although U.S. stocks toggled between positive and negative territory throughout the day, some traders said a tempered buying mood and the possibility of a rate cut by the Federal Reserve Board next week countered negative reports -- including data on gross domestic product, the manufacturing industry and initial job claims -- that all came in weaker than expected.

"We've been very encouraged by the action today; even after the economic numbers came out, we've seen the market recover," Hedi Reynolds, head of Nasdaq trading at Morgan Keegan, told CNNfn's Halftime Report. "I think it's good that the markets are bouncing off key numbers. I think [a Fed rate cut] is a real toss up -- tomorrow's unemployment number is going to have some effect on that."

Some economists are now saying said they think the Federal Reserve board could cut interest rates by up to a half percentage point next week and by an additional quarter percentage point at its December meeting as a way to boost the economy.

But others say that while a rate cut could happen, it wouldn't have the intended effect -- either because it is already priced in the market or because it won't encourage banks to lend money at very low rates to people without perfect credit.

Talk of a possible rate cut by the Fed has been on investors' minds, ignited by a sharp drop in consumer confidence data for October earlier this week and supported by additional reports Thursday.

The Conference Board, a business research group based in New York, said Tuesday its closely watched index of U.S. consumer confidence tumbled to 79.4 in October from a revised 93.7 in September -- its lowest level in nearly nine years.

Three key economic reports released early Thursday contributed to sentiment that the economy has not yet shown signs of a recovery, which could lead the Fed to lower rates.

Before the markets opened, the Commerce Department said GDP grew at an annualized rate of 3.1 percent in the third quarter, compared with just 1.3 percent in the second quarter. Economists, on average, expected a growth rate of 3.6 percent. GDP is the broadest measure of economic strength.

Separately, the Labor Department said initial jobless claims rose to 410,000 in the week ended Oct. 26 from a revised 394,000 in the prior week, signaling continued weakness in the labor market. Economists had forecast a rise to the key 400,000 level. The report is a prelude to the closely watched October employment data, which will be released Friday.

The National Association of Purchasing Management-Chicago index of manufacturing activity showed a dip to 45.5 in October from 48.1 in September. Any reading below 50 suggests contraction in the sector. Economists had expected the October index to rise to 49, according to Briefing.com.

"All of the news we got today was negative and the market was defying it ... the news was atrocious today," said Art Hogan, chief market analyst at Jefferies & Co.

The markets also anticipated midterm elections on Tuesday and the effect a shift in party dominance within the Senate and House of Representatives could have on the economy heading forward. Congressional races in several states have been extremely tight between Democratic and Republican candidates.

In corporate news, Dow component Exxon Mobil (XOM: down $0.42 to $33.66, Research, Estimates) reported lower third-quarter earnings that came in a penny a share higher than Wall Street estimates.

Positive comments Wednesday from IBM (IBM: up $0.27 to $78.94, Research, Estimates) CEO Sam Palmisano, who said he sees signs the economy has bottomed, also continued to affect the Dow and tech stocks.

Shares of Tenet Healthcare (THC: down $10.22 to $28.75, Research, Estimates) took a beating after the company said it was concerned by allegations of false billings and unnecessary procedures by two of its physicians contained in an affidavit filed by the U.S. attorney's office in Sacramento, Calif. Trading of the stock was temporarily halted.

Martha Stewart Living Omnimedia (MSO: down $1.26 to $7.20, Research, Estimates) reported lower third-quarter earnings and warned its fourth-quarter earnings would miss Wall Street estimates. The New York-based home decor and marketing company said it earned $2.8 million in the quarter, or 6 cents a share, compared with $4.8 million, or 10 cents a share, a year earlier.

Wall Street analysts expected the company to earn 6 cents a share, according to earnings tracker First Call. The company has been hurt in part by the insider trading scandal involving its founder, Martha Stewart.

European stocks closed higher, while Asian-Pacific stocks ended mixed Thursday, with Tokyo's Nikkei index down 1.3 percent but other markets showing gains.

Treasury prices moved higher with the 10-year note yield closing at 3.91 percent. The dollar dipped against the yen and euro.

Light crude oil futures gained 41 cents to $27.22 a barrel. Gold prices rose.

Market breath was positive. On the New York Stock Exchange, advancers beat decliners 9 to 7 as 1.5 billion shares traded. On the Nasdaq, advancers edged past decliners as 1.7 billion shares changed hands.