Traders work on the floor of the New York Stock Exchange, Sept. 30, 2015. Reuters/Brendan McDermid

UPDATE: 4 p.m. EDT

U.S. stocks staged a dramatic rebound Friday, with the Dow Jones Industrial Average rallying 200 points to post biggest reversal in four years. The blue-chip index plunged 250 points in morning trading after fewer-than-expected jobs were created in September, rekindling fears the U.S. economy might not be strong enough for the Federal Reserve to raise interest rates this year.

Original story: U.S. stocks wavered Friday after fewer-than-expected jobs were created in September, giving Federal Reserve officials room to pause before raising interest rates. Following the opening bell, the Dow Jones Industrial Average plunged 250 points but reversed and turned positive in afternoon trading.

The disappointing September employment report follows a recent trend of mixed economic reports, suggesting the economy continues to grow at moderate pace.

“These are disappointing numbers at this point in the recovery just after the Fed has decided to keep our record-low interest rates,” Tara Sinclair, chief economist at Indeed, said in a note. “It’s a sign that, at this point, the Fed may really be out of gas in terms of what they can do for the economy.”

The Dow Jones Industrial Average (INDEXDJX:.DJI) gained 59 points, or 0.4 percent, to 16,331. The Standard & Poor's 500 index (INDEXSP:.INX) added 8 points, or 0.4 percent, to 1,932. The Nasdaq composite (INDEXNASDAQ:.IXIC) rose 30 points, or 0.7 percent, to 4,656.

Six of the 10 S&P 500 sectors traded lower, led by a 2 percent decline in financial stocks. Dow components JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group Inc. (NYSE:GS) led the blue-chip index lower, shedding 2.8 percent and 2 percent, respectively.

The financials, which look to benefit from a hike in interest rates, likely declined Friday because the expectations have been pushed out for the Fed to lift rates this year.

The mixed August and September employment reports, coupled with recent stock market turmoil on concerns over China's cooling economy could mean the Fed will hold off on raising the cost of borrowing for the first time in nearly a decade.

“The mixed data support our expectation that the Fed will tilt to the side of caution during the process of policy normalization, implementing future rate hikes only at a very gradual pace,” Bob Hughes, senior research fellow at the American Institute for Economic Research, said in a note.

U.S. employers added 142,000 jobs in September and the unemployment rate remained at 5.1 percent, the Labor Department said Friday. The report was forecast to show employers adding 203,000 jobs last month and the unemployment rate was expected to hold steady at 5.1 percent, according to analysts polled by Thomson Reuters.

Meanwhile, August's figures were revised lower from 173,000 to 136,000.

The yield on the 10-year Treasury declined to 1.92 percent, signaling investors are betting against the Fed raising rates anytime soon.

Fed funds futures tumbled following the weaker-than-expected jobs report, with markets now pricing the Fed’s first rate hike in March 2016.

Markets are pricing a 2 percent chance of a rate hike this month, compared with prior expectations of 14 percent, according to the CME Group's FedWatch tool. Meanwhile, the markets are forecasting a 29 percent chance in December and a 51 percent next March.