Ouch. What else is there to say for everyone but holders of

S&P 500

put options and 10-year Treasury notes?

After Friday's jobs report came in lower than anyone had projected, with the economy adding just 32,000 jobs in July, the stock markets took all day to finally hit bottom. And oh what a bottom it was.



tumbled 2.5% Friday, ending the week down 5.9% at 1776.89, and about where it hit bottom last fall. In percentage terms, it was the second-biggest loss of the year topped only by the 2.52% drop of Feb. 4.


S&P 500

lost 1.6% for the day to 1063.97 -- ending the week down 3.4%. The

Dow Jones Industrial Average

dropped 1.5% Friday to 9815.33, ending the week down 3.2%.

With the major averages finishing near the lows for the day -- and at their lowest levels of 2004 -- there weren't many signs of a bottom as the weekend beckoned. Last Friday, I

suggested the positive trend could be sustained absent higher oil prices or jitters from a poor payrolls report. Well, the market got both and the bottom didn't hold.

Now all eyes turn toward Tuesday's meeting of the Federal Open Market Committee. The


is all but certain to hike rates another 0.25 percentage points to maintain the "measured" pace of increases it warned of starting in May.

Fixed-income markets signaled that the weak jobs number might put the Fed on hold for its next meeting in September. Until the past week or so, traders expected the Fed to raise its benchmark rate three times by year-end from the current 1.25% to 2%. Now the expectation is for two hikes to 1.75%.

The December futures contract for the eurodollar rate, which is usually about one-quarter of a percentage point above the federal funds rate, has declined from about 2.5% at the beginning of last week to 2.11% on Friday. That represented expectations of Greenspan's rate hikes for the rest of the year, dropping from 0.75 percentage points to 0.50 or less.

In conjunction, the yield on the 10-year Treasury note dropped to 4.22% on Friday, the lowest since April and down 25 basis points for the week.

"I think after Tuesday the Fed sits until November," says Richard Yamarone, director of economic research at Argus Research and the man with one of the lowest job-growth projections on Wall Street. "That's when a lot of this uncertainty will dissipate."

Winners and (More) Losers

It wasn't supposed to be this way. Fed Chairman Alan Greenspan spoke reassuringly on July 20 that weakness in jobs, consumer confidence and spending seen in June would be "short-lived." Investors interpreted the words of the Delphic chairman, and some intervening economic data, to mean the swoon was already over.

Wall Street was expecting something more like the March through May jobs reports, when over 200,000 jobs were added a month.

The news was also bad for President George W. Bush, who has been crowing about the growing strength of the economy. Treasury Secretary John Snow was trotted out Friday to reiterate the administration's confidence in a strong recovery.

Over on the University of Iowa's political futures exchange, it's been a different story. The Bush victory in November contract, which pays $1 if he wins and nothing if he loses, has dropped steadily from 60 cents in June to 52 cents on Friday.

Tony Crescenzi, chief bond market strategist at Miller Tabak and


contributor, says uncertainty over the election and terrorism will generate choppiness until November, followed by a "significant snapback" in the economy heading into the holiday season.

The jobs report was so bad, colleague Jim Cramer started tossing around the 'R' word, as in recession.

The change in focus to a gloomier outlook was consistent with the week's sector stock moves. Among those knocked hardest in Friday's maelstrom were basic materials producers.

Coal producers like

Massey Energy



Arch Coal

(ACI) - Get Report

and steel producers like


(NUE) - Get Report


Allegheny Technologies

(ATI) - Get Report

were among the five-worst performing sectors as measured by

Dow Jones

, each falling 9% on the week.

Those losses were topped only by Internet service and Internet commerce -- where big losers included





(OSTK) - Get Report

-- and technology service companies, which each lost about 10%.

Of course, tech and Internet stocks have been falling for weeks. Coal, steel and other basic materials companies had been among top performers for the year. In fact, the steel index was still up 19% for the year and coal up 15% even after this week's declines.

The short list of gaining sectors for the week included home-construction and real estate firms, such as

Toll Brothers

(TOL) - Get Report


CBL & Associates

(CBL) - Get Report

, which could benefit from lower-than-expected interest rates.

Also gaining were consumer staples such as

Procter & Gamble

(PG) - Get Report



(CLX) - Get Report

, as well as electric utilities such as


(EXC) - Get Report


Duke Energy

(DUK) - Get Report

, whose steady dividends look more attractive.

Also sucking wind was my

curtain raiser for the jobs report published Thursday night. Although I wasn't calling which way the report would come in, I expected a more muted reaction if fewer-than-expected jobs were created. After all, the S&P 500 had its worst day of the year Thursday and the Nasdaq was near its low for the year. And Thursday's drop was due to the forward-looking effect that higher oil prices might have on the market while the jobs report looks in the rearview mirror to July.

In retrospect, I underestimated just how skittish investors are about economic prospects and perhaps overestimated the buying interest on dips in the postbubble market.

Like I said: Tough week all around.

In keeping with TSC's editorial policy, Pressman doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send

your feedback.