What do investors need now? Patience

What Friday's stock market told investors is simple: If you thought the market would come roaring back from the July-August correction, you may need a patience pill.

The market ended the week with a big dive, largely due to the Labor Department's surprisingly weak jobs report. The report showed employers actually chopped jobs in August, and it fed into investor worries that the economy is slowing down and could fall into recession.

The Dow Jones industrials fell nearly 250 points, or 1.9%, to 13,113. It was the Dow's biggest loss since Aug. 28, when it fell 280 points.

The Nasdaq Composite Index fell 48.6 points, or 1.9%, to 2,566, and the Standard & Poor's 500 Index was off 25 points, or 1.7%, to just under 1,454.

The bottom line was that the Dow in one day shed all of its gains in the chaotic gyrations of August.

The blue-chip index lost 244 points, or just about 2%, for the week, its worst weekly loss since the week of July 30. The S&P 500 fell about 20 points, or 1.4% -- its worst loss since the week of July 30. And the Nasdaq slumped 1.2%, its worst weekly loss in a month.

For the year, the Dow, S&P 500 and Nasdaq are up 5.2%, 2.5% and 6.2%, respectively.

The payroll report and the market's reaction to it left many traders and investors begging for the Federal Reserve to cut interest rates at its Sept. 18 meeting, if not before. Rep. Barney Frank, D-Mass., chairman of the House Financial Services, said the jobs report should end the debate about whether a rate cut is needed.

"If the Fed doesn't comply, then there might well be riots on Wall Street (and with the Street now home to a BMW dealership), there are plenty of cars to flip," wrote Philippa Dunne and Doug Henwood of the Liscio Report, a newsletter that tracks state and local economies.

The Fed's key federal funds rate, the rate banks charge each other for overnight loans, has been at 5.25% since June 2006. The Fed cut its discount rate -- the rate it charges member banks for short-term loans -- to 5.75% from 6.25% on Aug. 17.

The discount-rate cut was part of a number of efforts by the Fed to prevent the U.S. credit system from seizing up. Markets around the world were roiled when subprime mortgage problems began to spread beyond the housing and real estate sector of the economy. Subprime mortgages were made to borrowers with little or no credit histories or with weak credit records.

For investors, the question for the next few weeks is what to do. Since the Dow peaked on July 19, it dropped 10% over the next few weeks and hasn't regained half of that loss.

Patience is probably key. Investors also shouldn't be rushing around looking for bargains yet. The issue is whether the lows the Dow, Nasdaq and S&P 500 reached in the middle of the day on Aug. 16 were the true bottom. Robert Walberg and Kelley Wright, two participants in MSN Money's Strategy Lab, both believe it's a good idea to start researching the market for good bargains to buy when the market is more stable.

• Read Walberg's post and Wright's post.

None of next week's economic and earnings reports will pack the wallop of Friday's jobs report. But the Stock Trader's Almanac told subscribers to watch for one decidedly political event -- next week's Congressional testimony of Gen. David Petraeus, the U.S. military commander in Iraq, and Ryan Crocker, U.S. ambassador to Iraq.

The "long-term health of the stock market relies on investors’ ability to look to the future and, in essence, bank on next year being better than the current," the Almanac said. "With the (Iraq War) raging, no clear direction or strategy, the debt mounting into the trillions of dollars and scores of our finest men and women dying every month, this is increasingly difficult even for the most ardent supporter of the war and the Administration."

The markets for the week

	Close for week	Wk. ago close	% chg.	YTD. chg.
Dow Jones industrials	13,113.38	13,357.74	-1.83%	5.22%
S&P 500	1,453.55	1,473.99	-1.39%	2.49%
Nasdaq Composite	2,565.70	2,596.36	-1.18%	6.23%
Russell 2000	775.79	792.86	-2.15%	-1.51%
Crude oil per barrel	$76.70	$71.09	7.89%	25.63%
10-yr. Treasury yield	4.37%	4.54%	-3.72%	-7.26%
Gold per troy ounce	$709.70	$681.90	4.08%	11.24%

A surprisingly bad payrolls report

The Friday jobs report fell far short of the gain of about 115,000 new jobs that most economists forecast. Worse, estimates for July and June were revised lower. Nigel Gault, chief U.S. economist at consulting firm Global Insight called the report simply "A lousy jobs report."

Employers cut payrolls by 4,000 in August -- the first time payrolls have declined since August 2003. The unemployment rate held steady at 4.6%.

• Video: A breakdown of the jobs numbers

July job growth was revised down to 68,000 from a previously reported gain of 92,000. June job growth was also revised down, to 69,000 from 126,000.

• Get free, real-time stock quotes on MSN Money

"The grip of the subprime mortgage crisis is apparent, as jobs growth has slowed to much less than half its second-quarter 139,000 monthly pace," University of Maryland economist Peter Morici, the former chief economist of the U.S. International Trade Commission, wrote in a research note Friday. "The risk of recession has increased to 50%."

"The only 'good' news was that the unemployment rate held steady at 4.6%, but it is only a matter of time before the unemployment rate heads higher," added Global Insight's Gault.

A nasty market loss

It was a nasty loss, with 29 of the 30 Dow stocks showing declines -- ditto for 471 S&P 500 stocks. The one Dow stock showing a gain on Friday was Johnson & Johnson (JNJ, news, msgs), up 2 cents to $61.68.

Eleven of the 30 Dow stocks had losses of 2% or more.

The laggard was General Motors (GM, news, msgs), down 4.8% to $29.55, its first close below $30 since the Aug. 28 sell-off. Analyst Robert Barry of Goldman Sachs backed his "buy" rating for the automaker but cut his price target by $5 to $37. He also lowered his earnings estimates for the next three years, citing new expectations of lower North American sales and production in the wake of the automaker's August sales results.

The market's drubbing was exacerbated by a sell-off in tech stocks, in part because of Apple's (AAPL, news, msgs) surprising apology to irate original iPhone buyers. Apple fell 2.4% to $131.77. Another issue was a 4.6% fall to $27.16 in shares of Dell Inc. (DELL, news, msgs). The stock fell after the company conceded it had underestimated demand for notebook computers.

The Philadelphia Semiconductor Index ($SOX.X) fell 2.5% on Friday; all 19 stocks in the index were lower.The four tech components in the Dow -- IBM Corp. (IBM, news, msgs), Microsoft (MSFT, news, msgs), Intel (INTC, news, msgs) and Hewlett-Packard (HPQ, news, msgs) -- were all at least 1.6% lower on the day. H-P had the biggest loss of the four, down 2.6% to $48.91. (Microsoft is the publisher of MSN Money.)

The worst S&P 500 stock was Office Depot (ODP, news, msgs) fell 9.5% to $19.85 after announcing it expects third-quarter earnings to decline by more than 10%. The company cited weak consumer spending. The company is also scaling back expansion plans over the next year.

The second-worst performer in the S&P 500 was motorcycle maker Harley-Davidson (HOG, news, msgs), whose shares fell more than 9.3% to $49.07, second-worst among S&P 500 stocks. The Milwaukee company cut its forecast for the number of bikes it will ship this quarter and said this year's profit will be lower than its 2006 profit.

Energy prices -- New York close

	Fri.	Thur.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$76.70	$76.30	$0.40	3.59%	25.63%
Heating oil (per gallon)	$2.1432	$2.1368	$0.0064	4.95%	34.13%
Natural gas (per million BTU)	$5.5010	$5.6500	-$0.1490	0.60%	-12.67%
Unleaded gasoline (per gallon)	$1.9864	$1.9717	$0.0147	-3.19%	23.99%

A bad-tasting Apple

Apple shares were reeling Friday after CEO Steve Jobs' apology to original iPhone customers.

• Video: Jobs says i-Sorry

On Wednesday, Jobs announced that the price of the iPhone would be reduced to $399 from $599 -- and almost immediately, Jobs was deluged by e-mails from irate customers who had paid full price for their iPhones and were now complaining that it was too soon for the device to go on sale.

So Jobs had a solution: Apple will give each of the early iPhone customers a $100 credit at the Apple store.

"We want to do the right thing for our valued iPhone customers," Jobs wrote in an open letter on Apple's Web site. "We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple."

• Read Jobs' apology letter

Jobs said the price cut was to allow more people to buy the iPhone in time for the holidays.

For the week, Apple shares were down 4.9%.

Denial from Beazer Homes

Shares of Beazer Homes (BZH, news, msgs) were down nearly 13% to $9.50 on Friday after the home builder said it received purported default notices from U.S. Bank, the trustee under the indentures governing several outstanding senior notes.

In a press release, Beazer said the default notices allege that the home builder is in default because it has not yet filed its second-quarter 10-Q earnings report with the Securities and Exchange Commission.

Beazer "does not believe that it is in default" and said that "the indentures require only that Beazer deliver to the trustee copies of Beazer's SEC reports within 15 days after such reports are actually filed with the SEC."

The news is the latest in a slew of troubles for the home builders amid worries about whether all the builders will survive the housing slump.

Beazer's problems hurt home builders generally. Ryland Group (RYL, news, msgs) fell 2.7% to $26.28. Lennar (LEN, news, msgs) and Pulte Homes (PHM, news, msgs) fell 3.6% to $26.52 and $15.50, respectively.

The Philadelphia Housing Sector Index ($HGX.X) fell 3.2% Friday to 159.92. It's down 25% this year.

Gold prices rise

Gold finished at its highest level since May 2006 on Friday. The precious metal closed at $709.70 an ounce in New York, up $5.10 from Thursday and up 4.1% for the week.

The reason for the jump? "Gold is being supported by a weaker dollar and near record oil prices again," Mark O'Byrne, director at Gold and Silver Investments, wrote in e-mailed comments, according to MarketWatch.com. "The continuing uncertainty in the financial markets is likely to be leading to an increase in safe haven buying as well."

• Video: A break-in at Warren Buffett's

Another reason for gold's bold move: speculation of lower interest rates.

"Any cut in rates helps the metals because it's just less competition" from rival assets, said Marty McNeill, a trader at R.F. Lafferty, said to Bloomberg News.

Short hits from the markets -- 4 p.m. ET

	Fri.	Thur.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	3.940%	4.160%	-0.220	-1.25%	-19.34%
5-year Treasury note yield	4.020%	4.193%	-0.173	-5.43%	-14.49%
10-year Treasury note yield	4.368%	4.500%	-0.132	-3.72%	-7.26%
30-year Treasury bond yield	4.693%	4.790%	-0.097	-2.86%	-2.59%
Currencies
U.S. Dollar Index	79.91	80.45	-0.54	-1.03%	-4.22%
British pound in dollars	$2.0296	$2.0247	0.0049	0.57%	3.57%
Dollar in British pounds	£0.4927	£0.4939	-0.0012	-0.57%	-3.45%
Euro in dollars	1.3774	1.3695	0.0079	1.03%	4.35%
Dollar in euros	€ 0.7260	€ 0.7302	-0.0042	-1.02%	-4.17%
Dollar in yen	¥113.48	¥115.42	-1.94	-1.96%	-4.65%
Commodities
Gold	$709.70	$704.60	$5.10	4.08%	11.24%
Copper	$3.2515	$3.3025	-$0.051	-4.28%	13.25%
Silver	$12.7600	$12.5330	$0.23	4.33%	-3.11%
Crude oil (NYMEX) (per barrel)	$76.70	$76.30	$0.40	3.59%	25.63%

Market turmoil déjà vu?

Former Fed chief Alan Greenspan has been here before.

Greenspan compared the recent market jitters to the 1987 crash and the panic from the collapse of hedge-fund Long Term Capital Management in 1998.

"The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987, I suspect what we saw in the land-boom collapse of 1837 and certainly (the bank panic of) 1907," Greenspan said Thursday at an event organized by the Brookings Papers on Economic Activity, The Wall Street Journal reported.

"The human race has never found a way to confront bubbles," Greenspan said at the event.

Greenspan was Fed chairman from the summer of 1987 to early 2006. Ben Bernanke took over in the beginning of 2006.

National Semi profit falls 29%

Chip maker National Semiconductor (NSM, news, msgs) said late Thursday that fiscal-first-quarter income fell 29% to $85.6 million, or 30 cents per share, from $120.1 million, or 35 cents a share, a year ago.

Earnings still beat analysts' expectations of 25 cents per share.

Sales fell 13% in the quarter to $471.5 million, also beating the consensus estimate of $467.4 million.

The company, which makes chips for mobile devices like the iPhone, blamed weak sales. Wall Street still punished the shares, which were down 3.1% to $25.76 on Friday.

By Charley Blaine and Elizabeth Strott