Thursday's economic data, which showed a gain in jobless claims and a drop in factory orders, gave investors little incentive to make any big moves ahead of the payrolls report.

Wall Street appears optimistic that the Labor Department report Friday will indicate a rebound from August and include revisions to that month's dismal numbers. August's job creation report showed a decline in payrolls when economists had predicted a rise, and sent the Dow Jones industrial average down nearly 250 points the day it was released. Since then, the Federal Reserve has lowered a key interest rate and the Dow quickly bounced back to where it was in mid-July, before the credit markets tightened up and caused stocks to fall sharply.

Friday's report is important because this year's relatively stable job market has been an important prop for the U.S. economy, helping to offset the housing slump and sluggish growth.

"The jobs report can be a real distraction for the market, and with good reason. The number of people working, where they work, how much they get paid, tells us a whole lot about the economy," said Alan Gayle, senior investment strategist at Trusco Capital Management. "In the meantime, the markets are pretty much treading water. A strong report tomorrow will revive notions that the Fed is one and done. If the report continues to be soft, that's going to suggest more easing coming our way."

But while investors are angling for the Fed to lower rates again when it meets Oct. 30-31 — which would spur spending by making borrowing cheaper — they don't want the job market to weaken. When people don't have incomes, they tend to trim spending and can become delinquent in their bill payments.

"A relatively strong employment report will be good news for stocks in that it will help support profit growth," Gayle said. "Obviously Fed rate cuts are good, but more earnings is always the best."

According to preliminary calculations, the Dow rose 6.26, or 0.04 percent, to 13,974.31, after shooting to a record high Monday and then giving back a large chunk of its gains Tuesday and Wednesday.

Broader stock indicators were also little changed on the day, which was notable for its low volume and low volatility. The Standard & Poor's 500 index rose 3.25, or 0.21 percent, to 1,542.84, and the Nasdaq composite index advanced 4.14, or 0.15 percent, to 2,733.57.

Bonds rose as the markets awaited the employment report. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell to 4.53 percent from 4.55 percent late Wednesday.

The stock market appeared unfazed by comments from Dallas Fed President Richard Fisher who said that while credit markets have stabilized from the gyrations seen in August, problems with products such as asset-backed securities remain, according to Dow Jones Newswires. Asset-backed products include loans that are bundled and sold off to investors. These securities that include subprime loans, which are made to borrowers with poor credit, have fallen out of favor amid concerns about rising mortgage defaults.

These securities that include subprime loans, which are made to borrowers with poor credit, fell out of favor amid concerns about rising mortgage defaults. However, demand appears to be slowly creeping back to normal: Asset-backed commercial paper outstanding dropped by $6.1 billion in the week ended Wednesday, the Fed said, the smallest decrease since the commercial paper market began contracting in mid-August.

On Thursday, the Labor Department said jobless claims rose 16,000 to 317,000 in the week ended Sept. 29, a bigger jump than analysts anticipated. Meanwhile, the Commerce Department reported that orders to U.S. factories fell in August by 3.3 percent, slightly worse than expected and the largest amount in seven months. Although the activity reflected in the report predates the Fed's rate cut, it still shows the degree to which the economy has been struggling.

The U.S. dollar fell against most major world currencies, pushing gold higher.

Crude oil futures settled higher for the first time in four sessions as investors weighed whether supplies are adequate to meet demand. Light, sweet crude for November delivery rose $1.50 to settle at $81.44 a barrel on the New York Mercantile Exchange.

In corporate news, Bear Stearns Cos. fell 67 cents to $127.61 after the company said it was laying off 310 workers associated with its mortgage operations. Executives said, however, that its business is slowly rebounding after a turbulent summer. Bear Stearns, the investment bank most heavily exposed to the home loan market, booked big charges after two of its hedge funds that bet on mortgage debt imploded.

Meanwhile, Merrill Lynch & Co. fell $1.22 to $74.78 after a CIBC World Markets analyst cut her third-quarter earnings estimate for the company, predicting the tumult that swept through the credit markets this summer will erase $3 billion from the investment bank's revenue.

Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 1.25 billion shares traded Wednesday.

The Russell 2000 index of smaller companies rose 3.00, or 0.36 percent, to 829.15.