U.S. stocks rallied Friday as the country's nonfarm payrolls report came out much better than expected.

The Dow Jones Industrial Average rose 44.79 points, or 0.21 percent, to 20,902.98. The S&P 500 added 7.73 points, or 0.33 percent, to 2,372.60. The Nasdaq Composite Index was up 22.92 points, or 0.39 percent, to 5,861.73.

U.S. total nonfarm payroll employment increased by 235,000 in February, well above market consensus of 188,000, the Labor Department announced Friday. The unemployment rate was little changed at 4.7 percent in February.

In February, average hourly earnings for all employees on private nonfarm payrolls increased by 6 cents to 26.09 U.S. dollars, following a 5-cent increase in January. Over the year, average hourly earnings have risen by 71 cents, or 2.8 percent.

After Friday's jobs report, market expectations for a March rate hike by the Federal Reserve increased to 93 percent from around 90 percent in the previous day, according to the CME Group's FedWatch tool.

"From the Fed's point of view this report does not matter for next week's decision. Their minds appear made up on a hike next week. But it does matter for their forecast, which is the most likely source of a surprise next week," said Chris Low, chief economist at FTN Financial, in a note.

The U.S. central bank is scheduled to hold its next monetary policy meeting on March 14 and March 15.

For the week, all three major indices witnessed modest losses, with the Dow, the S&P 500 and the Nasdaq going down 0.5 percent, 0.4 percent and 0.2 percent, respectively.