Stocks rose Friday, capping their fourth straight week of gains, as investors chose to shrug off weak reports on jobs and manufacturing amid hopes that the Federal Reserve will cut interest rates next week.

The Dow Jones industrial average closed up 120.61 points, or 1.44 percent, at 8,517.64, after closing October with its best monthly performance since 1987 on Thursday. The technology-laced Nasdaq Composite Index was up 30.95 points, or 2.33 percent, at 1,360.70. The broader Standard & Poor's 500 Index was up 15.2 points, or 1.72 percent, at 900.96.

For the week, the Dow gained 0.9 percent, the S&P 500 advanced 0.4 percent and the Nasdaq climbed 2.2 percent. It was the longest weekly streak of gains for the Nasdaq composite index so far this year.

"There was this haunting worry," said Hugh Johnson, chief investment officer at First Albany Corp. "The numbers were soft, but they could have been worse."

Software leader Microsoft Corp. (MSFT) stole some of the spotlight from the economy. The Nasdaq giant and Dow component was expected to learn after the closing bell whether a federal judge will approve the proposed settlement of a landmark antitrust case reached a year ago with the U.S. Justice Department and nine states.

Microsoft shares dropped 47 cents to $53 during the regular trading session.

After Friday's closing bell, U.S. District Judge Colleen Kollar-Kotelly endorsed all of the antitrust settlement that Microsoft reached last year with the Justice Department. In after-hours trading, Microsoft shares jumped as high as $55.

Other technology shares headed higher. Web gear maker Cisco Systems Inc. (CSCO) added 43 cents to $11.61, ranking as the most active name on the Nasdaq. Chip leader Intel Corp. (INTC), the second-most active, rose $1.00 to $18.30.

"It's a partial expectation that the worst of the news is behind us. It's becoming a buying-on-the-dip market in equities," said Rick Meckler, president of investment firm LibertyView, which oversees about $1 billion. "The general view is that the fourth quarter could be positive for equities."

Some analysts are wagering the Federal Reserve will cut interest rates at its policy-setting meeting next week after reports showed the U.S. economy shed 5,000 jobs in October and gloom at factories deepened.

Last month marked the second straight decline in the number of workers on U.S. payrolls, the Labor Department reported. The unemployment rate rose to 5.7 percent in October from 5.6 percent in September. Still, the rise in the jobless rate was less than the 5.8 percent expected by economists.

The bleak message of the jobs data dovetailed with a report from the Institute for Supply Management that showed worsening in the manufacturing sector's slump.

ISM's closely watched factory index slipped to 48.5 from 49.5 in September. Any reading below 50 shows shrinkage in the manufacturing industry. However, a dismal Chicago area survey out Thursday had led the market to anticipate an even worse outcome, traders said.

"The data wasn't really all that bad; it was close to consensus numbers," said Jon Brorson, Director of equities at Northern Trust Co., which oversees $300 billion.

The data raised hopes the central bank would cut rates. The Fed slashed rates 11 times in 2001, setting the key short-term interest rate -- the fed funds rate -- at a 40-year low of 1.75 percent, but it has not adjusted rates yet so far this year.

In the latest corporate news, Tenet Healthcare Corp. (THC) sank $2.25, or 7.8 percent, to $26.50 and ranked as the most active share on the New York Stock Exchange. The No. 2 U.S. hospital chain said U.S. prosecutors in California were investigating allegations two of its doctors falsely billed for and conducted unnecessary heart procedures. Shares had lost a quarter of their value on Thursday.

MCG Capital Corp. (MCGC) tumbled $3.34, or 28.5 percent, to $8.40 and ranked as the largest percentage loser on the Nasdaq. The company said Chief Executive Bryan Mitchell revealed he does not have an undergraduate degree from Syracuse University, contrary to past disclosures, becoming the latest CEO to own up to false biographical information.

H&R Block Inc. (HRB) slumped $3.43, or 7.7 percent, to $40.95 after saying it faces lawsuits related to high-interest loans the tax preparer made to customers in anticipation of tax refunds.

Advancing stocks beat out decliners by a ratio of 2 to 1 on the New York Stock Exchange and 18 to 11 on Nasdaq. More than 757 million shares traded hands on the Big Board and more than 1 billion on Nasdaq in active trading.

The Russell 2000 index, which tracks smaller company stocks, rose 9.95, or 2.7 percent, to 383.45.

Overseas, Japan's Nikkei stock average finished Friday up 0.5 percent. In Europe, France's CAC-40 declined 1.3 percent, Britain's FTSE 100 fell 1.1 percent, and Germany's DAX index gained 0.4 percent.

Reuters and the Associated Press contributed to this report.