(Corrects firm, title for Daniel Stecich in fifth paragraph)
* ISM manufacturing index exceeds forecast
* Chevron falls after weak revenue, weighing on Dow
* Dow up 0.2 pct, S&P 500 off 0.02 pct, Nasdaq down 0.2 pct
By Luke Swiderski
NEW YORK, Nov 1 (Reuters) - The major U.S. stock indexes traded mixed on Friday as traders digested October's surprisingly strong manufacturing growth, with the Dow and the S&P 500 not far from record highs reached earlier this week.
American International Group Inc fell 6.3 percent to $48.39, making it the S&P 500's biggest loser, a day after the insurer reported third-quarter earnings that slightly beat expectations. However, analysts expected better results in the insurer's consumer lines business and said it benefited from a favorable tax rate this most recent quarter.
The Institute for Supply Management (ISM) said its index of U.S. factory activity rose to 56.4 in October, topping economists' expectations with its best reading since April 2011.
This is nominally a positive reflection of the U.S. economy, but the stronger-than-expected figure complicates investors' expectations for the timing of when the Federal Reserve may begin to trim its $85 billion in monthly bond purchases. The Fed's stimulus program has given buyers a reason to invest in riskier assets like stocks.
"I'm actually surprised the market's held up," said Daniel Stecich, senior vice president and director of economic research at Athena Advisor Services.
Equities have retreated from recent highs since Wednesday after the Federal Reserve, in its latest meeting, removed a sentence from its statement noting tight credit conditions. That raised expectations that the central bank may be ready to start trimming its bond purchases as early as December.
The Dow Jones industrial average rose 24.50 points or 0.16 percent, to 15,570.25. The Standard & Poor's 500 dipped just 0.35 of a point, or 0.02 percent, to 1,756.19. The Nasdaq Composite Index slipped 5.85 points or 0.15 percent, to 3,913.86.
Shares of Chevron Corp fell 2.2 percent to $117.33, accounting for about 14 points of negative drag on the Dow Jones industrial average, after the energy company reported disappointing results on Friday. Chevron's third-quarter revenue came in below expectations.
Boeing Co shares gained 1.4 percent to $132.37 and helped support the Dow industrials. On Thursday, Boeing said it would increase production of its 737 aircraft to 47 planes per month by 2017 from 38 now - a surprising move that analysts said boded well for the U.S. company, its suppliers and airlines.
With about 74 percent of S&P 500 companies having reported earnings so far, 68.5 percent have topped Wall Street's expectations, above the long-term average of 63 percent, according to Thomson Reuters data. However, only 53.3 percent have topped revenue forecasts, below the 61 percent average since 2002.
First Solar Inc soared 18.4 percent to $59.55 a day after the U.S. solar panel manufacturer's results beat expectations and the company raised its full-year profit outlook.
Ford Motor Co shares slipped 1.2 percent to $16.91, reversing an earlier gain of as much as 0.7 percent, after the company reported October sales growth of 14 percent. Ford's sales last month narrowly missed analysts' expectations. (Editing by Jan Paschal and Kenneth Barry)