The September jobs report and recent economic data suggest the Fed overreacted with its jumbo rate cut. The U.S. economy continues to hum at a stronger clip than many expect, which raises the question of whether the Fed made the right call going with a jumbo rate cut.

Stocks rallied after data showed nonfarm payrolls grew by 254,000 jobs in September, far outpacing the forecasted gain of 150,000 from economists polled by Dow Jones. The unemployment rate ticked down to 4.1% despite expectations for it to hold steady at 4.2%.

The Dow posted a record closing high on Friday and the Nasdaq ended with a more than 1% gain as a stronger-than-expected jobs report reassured investors who had worried the economy may be getting too weak.

U.S. stocks rallied Friday on fresh signs of a strong labor market, with the Dow Jones Industrial Average ending at a record peak while the bond market dialed back recession fears.

U.S. stocks rallied Friday after a surprisingly strong report on the U.S. job market raised optimism about the economy. The Standard & Poor's 500 climbed 0.9% and got close to its all-time high set on Monday.

Odds of a 50 basis point cut dropped to 0% from 53% last week after the strong September jobs report, according to the CME FedWatch Tool.

The Dow Jones Industrial Average rose 341 points, or 0.8%, to set its own record, while the Nasdaq composite clambered 1.2% higher. Leading the way were banks, airlines, cruise-ship operators and other companies whose profits can benefit the most from a stronger economy where people are working and better able to pay for things.