The contagious refrain of an economic soft patch withered into a chorus of moans and groans Friday as investors prepared for what likely will be a tough slog ahead.
Call it what you like—dead-cat bounce, double-dip or something worse—but the recent market rally that saw the Dow industrials climb about 750 points in three weeks seems just as transitory as any other recent market or economic trend.
"There are certainly a lot of individuals out there, namely the fundamental traders, the so-called market experts that rely on hard factual data that are certainly...scratching their heads," said Brian LaRose, strategist at United I-CAP in Jersey City, N.J.
"We have not been on the same page as those who think this is just a soft patch," he added. "We highly believe this is not a soft patch, that this is a bigger problem that has yet to be addressed."
From a technical standpoint it's not a lock that stocks plunge immediately from here, he said. Instead, the market likely will test resistance points and even could go higher before seeing what he predicts will be a precipitous drop.
"Even if we do get marginally higher highs in equities, we feel it's going to be a major bull trap. Until we get things better fundamentally, the technicals are going to back the case for a major downside in our assets," he said. "If you're an investor the sidelines are the best place for you to be. If you're a trader, you play the ranges right now."
The catalyst for Friday's selloff, and for a renewed round of market pessimism, was a government report showing just 18,000 new jobs created last month and a rise in the unemployment rate to 9.2 percent.
This was supposed to be the month when the jobs picture would turn around. Prominent economists such as Joe LaVorgna at Deutsche Bank, who projected 175,000 new jobs, and Goldman Sachs' Jan Hatzius, who was looking for 125,000, were proven terribly wrong.
President Obama grasped for answers during a morning news conference, and investors began confronting the prospect of an at-best rangebound market until the economy showed real signs of growth.
"We are back where we started; the risk of a cold summer, similar to last year, is palpable," Ethan Harris, head of developed markets economic research at Bank of America Merrill Lynch, said in a note to clients. "While we expect a second half growth bounce, we believe the risks around that view are to the downside."
Economists for months have been expecting a bounce that has failed to materialize. It's a frustration magnified by Friday's jobs numbers that may have been even worse than they appeared.
In addition to the paltry job growth, the rate that includes people who are not looking for work swelled to 16.2 percent. The government's birth-death model, used to approximate the difference between new and failed businesses, added 131,000 to the June numbers, implying that without the adjustment the economy actually lost 113,000 jobs.
From an investment standpoint, the development couldn't come at a worse time, squelching a rally that seemed to be sending a message that the euro zone debt crisishad been forestalled and the US economy was becoming the best house in a troubled global neighborhood.
Prior to Friday's sell-off, stocks had seen consecutive weeks of positive inflows, with BofA reporting $1.4 billion coming into equity mutual funds over the past week.
Indeed, even Friday's trading reflected an unwillingness to give up, with the major averages off but by less than 1 percent or so through most of the day.
"The employment report is really backwards looking. It was an awful number that really reinforces the incredibly slow upturn that we've had over the last two years, and it's not good news," said Mark Coffelt, president and CIO of Empiric Advisors in Austin, Texas.
However, he added, "We don't see another downturn. We think that the global economy is going to continue to plug along, albeit slowly. It's probably a pretty good opportunity to buy stocks, which is exactly what we did this morning."
Coffelt, who runs the Empiric Core Equity Fund, said he is buying energy stocks, which have been leading the market both up and downthrough much of 2011. The fund is rated two stars by Morningstar and is up 12.6 percent year to date.
But such cyclical risk, as with energy stocks, could be in low supply from investors feeling battered by the economic headwinds.
Quincy Krosby, market strategist at Prudential Financial in Newark, said investors will be watching the weekly jobless claims even more closely now. The claims number has remained stubbornly above 400,000, suggesting little real growth in the jobs picture.
"They must come down and they must come down in a steady fashion, or else the market is going to operate on the premise that there are pockets of opportunity and (look) for where companies are doing well—very company specific," she said.
That type of environment is likely to create a fickle broader market, one subject to the vagaries of the economy and perhaps looking for more help from Congress, the White House—and the Federal Reserve.
"What's happening right now is the small business owners—the normal creators of jobs in this country—are holding back. Unless you get them as a meaningful part of the economic equation, this will be a story that just doesn't end," Krosby said. "The one thing that's missing is confidence, and confidence is the least expensive stimulus."
Two things could return that confidence: The upcoming earnings season and, to a bit lesser degree, a continued positive climate for mergers and acquisitions. The US is coming off a red-hot first half for M&A, with $584 billion worth of deals since the beginning of the year, the best since 2008 and a 41 percent gain over 2010, according to Dealogic.
"This (unemployment) is a tough number, it's a bad number," David Kelly, chief market strategist at JPMorgan Funds, told CNBC. "There are no silver linings, but I'd still be overweight equities here."