Stocks jumped Friday morning after the latest reading on the U.S. labor market brought relief over the strength of the economy. 

The S&P 500 was up 1.2%, reversing all losses suffered over the Brexit selloff. The Dow Jones Industrial Average added 1.1%, returning to a level above 18,000, and the Nasdaq climbed 1.4%.

The U.S. nonfarm payrolls report showed that 287,000 jobs were added in June, well above economists' expectations of 175,000. The 35,000 workers returning from a May strike at Verizon boosted the headline figure.

The U.S. unemployment rate rose to 4.9% from 4.7%, while the labor force participation rate increased to 62.7%. Average hourly wages rose 0.1% to $25.61.

The dismal jobs reading from May was reduced even further to just 11,000 from 38,000. April's reading was increased to 144,000 from 123,000.

The report is being closely scrutinized through the lens of what it could mean for the Federal Reserve. Chances of a rate hike in the near term were greatly diminished after the United Kingdom's vote to exit the European Union, though these signs of improvement in the U.S. labor market could put a late-2016 hike back on the table.

"The FOMC is definitely breathing a sigh of relief as this report indicates the May reading was a 'one off' and confirms that the U.S. labor market is still relatively healthy," said Chris Gaffney, president of EverBank World Markets. "This surprisingly strong job report will probably put a 2016 rate increase back into the conversation."

The chances of a rate hike in July are virtually non-existent. A rate hike from the Federal Reserve in December, the meeting with the highest likelihood, now has a probability of 22.8%, according to CME Group Fed funds futures. The likelihood of a December rate hike was previously at 18.4%. 

Banking stocks spiked on the increased chances of a rate hike. Bank of America (BAC - Get Report) , Wells Fargo (WFC - Get Report) , Citigroup (C - Get Report) and JPMorgan (JPM - Get Report) each moved higher after the release. The Financial Select Sector SPDR ETF (XLF - Get Report) rose 1.8%. 

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Juno Therapeutics (JUNO) slumped nearly 30% after the Food and Drug Administration put one of its cancer drugs on a mid-stage clinical hold after the death of two patients undergoing treatment. The biotech company has requested the trial continue without the use of fludarabine, the suspected factor in the deaths.

Gap (GPS - Get Report) rose 5% after reporting a 2% increase in comparable sales in June to a total $1.57 billion. Same-store sales declined at its namesake brand and Banana Republic, though increased at Old Navy stores.

Barracuda Networks (CUDA)  increased after besting analysts' estimates on its top- and bottom-lines. The tech company earned 20 cents a share in its first quarter, 9 cents above forecasts, while revenue jumped more than 11% to $86.65 million.

PriceSmart (PSMT - Get Report) tumbled after reporting a disappointing third quarter. The discount chain earned an adjusted 55 cents a share, 15 cents lower than expectations. Revenue of $704.26 million missed estimates by nearly $2 million.

Polycom (PLCM) jumped after private-equity firm Siris Capital agreed to buy the enterprise networking company in a deal worth $2 billion. The acquisition ends Polycom's previous merger with Mitel Networks (MITL) .