Wall Street's main stock indexes rallied Friday as bond yields fell sharply after data showed signs of slowing U.S. jobs growth and an uptick in unemployment, boosting hopes that the Federal Reserve is done with its interest rate hiking campaign.

The Labor Department's report showed nonfarm payrolls increased by 150,000 jobs in October, much less than the expected 180,000 increase, partly due to strikes at Detroit's Big Three automakers.

Data for the last month was revised lower to show an increase of 297,000 instead of 336,000. The unemployment rate edged up to 3.9%.

"From a policy perspective this gives confidence the Fed remains on hold for the foreseeable future and only really hikes again if growth or inflation accelerate from here," said Matt Palazzolo, senior investment strategist at Bernstein Private Wealth Management.

But what Palazzolo expects to happen is a steady deceleration in labor market gains and economic activity for the next six to nine months and, provided that happens it "should allow for the Fed to stay on hold at current levels," he said.

According to preliminary data, the S&P 500 gained 40.38 points, or 0.94%, to end at 4,358.16 points, while the Nasdaq Composite gained 184.09 points, or 1.38%, to 13,477.23. The Dow Jones Industrial Average rose 220.20 points, or 0.65%, to 34,059.28.

The small-cap Russell 2000 index also rallied, and touched its highest level since Oct. 17. During the session, the CBOE volatility index touched a fresh six-week low, reflecting easing investor anxiety.

The jobs data also helped push U.S. Treasury yields lower for the fourth consecutive session. During the session the benchmark 10-year Treasury yield hit its lowest level in over five weeks. The move in yields supported stocks.

"Falling interest rates is probably the top catalyst this week," said Tony Welch, CIO of SignatureFD, Atlanta Georgia, adding the jobs report supported this trend.

"The Fed has had a difficult time getting their monetary policy to actually loosen the labor market," he said, noting that Friday's data encouraged the "interpretation that the Fed may be done with a tightening cycle."

Welch also noted that solid earnings reports were helping stocks as companies have expanded profit margins.

Analysts expect earnings growth of 5.7% for S&P 500 companies in the third quarter, with over 81% of the 403 companies in the benchmark index that have reported profits so far having beaten estimates, per LSEG data.

Apple was an outlier, losing ground after its sales forecast for the holiday quarter fell short of expectations.

Among major movers, Block jumped after raising its annual adjusted profit forecast. Fortinet dropped on a downbeat fourth-quarter revenue forecast.