U.S. stocks closed higher on Friday after a surprisingly weak September nonfarm payrolls report boosted expectations that the Federal Reserve will hold rates steady at its October meeting.

The Dow Jones Industrial Average rose 250 points, or 0.5%. The S&P 500 gained 0.7%, and the Nasdaq Composite climbed 1.2%. The Nasdaq briefly hit an all-time intraday high, though Treasury yields later rebounded, pulling stocks back from their session peaks.

Despite Friday's bounce, the Dow still fell about 1.3% for the week. The S&P 500 was essentially flat, dipping 0.3%, while the Nasdaq rose 0.6% for the week and notched a third straight daily gain on Friday.

Treasury yields moved lower in early trading after the jobs data but then reversed course, dragging stocks off their highs. Risk appetite returned to Wall Street, with tech shares rallying broadly.

Nvidia shares hit a high not seen since May, though they failed to hold their record closing level. CrowdStrike, Palo Alto Networks, and AMD also touched record highs, with AMD closing up nearly 3%.

The payrolls report showed the U.S. added just 29,000 jobs last month, with the unemployment rate rising to 4.2%. Economists surveyed by Dow Jones had expected 84,000 jobs and an unemployment rate of 4.1%.

"From a labor market perspective, this is exactly the kind of data the market wanted. Not too hot, not too cold, not too strong, not too weak," said Phil Blancato, chief market strategist at Osaic.

The jobs data prompted traders to reassess the Fed's policy path. The CME FedWatch Tool showed fed funds futures pricing a 77% probability that the central bank will leave rates unchanged this month.

Saira Malik, chief investment officer at Nuveen, said the jobs report could support the market as earnings season kicks off, and she expects a "very strong" reporting period. "I think this may be the start of the Santa Claus rally everyone has been waiting for," she said.

Oil prices fell on reports that some European Union countries are considering releasing strategic fuel reserves under pressure from the Trump administration, a positive for stocks.

Stocks edged higher on Thursday, the first trading day of October. But dragged by a global bond selloff, the Dow and S&P 500 were at risk of ending the week lower, while the Nasdaq was the only major index on track for a weekly gain.