* Sept nonfarm payrolls up by 142,000 vs 203,000 expected
* Unemployment rate unchanged at 5.1 pct
* Expectations of rate hike this year recede
* Indexes close up: Dow 1.23 pct, S&P 1.43 pct, Nasdaq 1.74 pct (Updates to close, adds comment, detail on performance)
By Noel Randewich
Oct 2 (Reuters) - U.S. stock indexes jumped over 1 percent on Friday as worries about the economy after a disappointing jobs report gave way to a robust rally in energy and materials stocks.
The three major indexes clawed back losses of more than 1.5 percent as poor payroll data hinted at economic weakness while strengthening the argument for delaying a long-awaited interest rate hike.
The recently beaten-down S&P energy index surged 4.01 percent following a rise in oil prices, while the materials index jumped 2.41 percent.
"The silver lining with this disappointing jobs number is that possibly this could push the rate hike off to the first quarter of 2016," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa.
Friday's strong performance follows over a month of turbulence in global markets that has seen the S&P lose 7 percent of its value over fears that troubles in China's economy could spread around the world.
Now, with the third-quarter earnings season starting next week, investors are starting to factor in what might be the biggest decline in profits for S&P 500 companies in six years.
Analysts on average expect third-quarter earnings to decline 4.2 percent, according to Thomson Reuters data.
"There are a lot of concerns that a weakening global economy may be impacting the U.S., so that certainly doesn't bode well for earnings," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"It's going to be a market where we're going to see more and more volatility and major support levels being tested," Cardillo said.
Nonfarm payrolls rose by 142,000, far below the 203,000 economists had expected, and August and July figures were revised down. But the jobless rate held at 5.1 percent.
The report, the last before the Federal Reserve's meeting at the end of October, appeared to contradict Fed Chair Janet Yellen's comment last week that the economy was strong enough to withstand a rate hike this year.
Odds of a December rate hike fell to a little over 27 percent from 44 percent before the report.
Following a steep selloff since late August, the S&P 500 is trading at 15.1 times expected earnings, slightly below the long-term median of 15.6.
The Dow Jones industrial average rose rallied 1.23 percent to end at 16,472.37 points.
The S&P 500 gained 1.43 percent to 1,951.36. It bounced about 3 percent from its intra-day low to its closing level.
The Nasdaq Composite jumped 1.74 percent to finish at 4,707.78.
For the week, the Dow and S&P both rose 1 percent. The Nasdaq added 0.5 percent.
Of the 10 major sectors, only the financial index failed to advance on Friday.
Chevron rose 4.10 percent and ConocoPhillips jumped 2.12 percent. Alcoa jumped 2.81 percent.
About 8.3 billion shares changed hands on U.S. exchanges, above the 7.25 billion average for the previous 20 sessions, according to Thomson Reuters data.
NYSE advancing issues outnumbered decliners 2,321 to 753. On the Nasdaq, 1,930 issues rose and 882 fell.
The S&P 500 index showed four new 52-week highs and 56 lows, while the Nasdaq recorded 13 new highs and 189 lows.
(Additional reporting by Charles Mikolajczak, Tanya Agrawal, and Abhiram Nandakumar; Editing by Nick Zieminski)