Getting back on the bull will be no easy task next week, particularly after the meltdown stock investors endured over the past two days.

The Standard & Poor's 500 and Dow Jones industrial average ended trading on Friday at the week's lowest levels, mark the worst one-week percentage drop for the S&P 500 in nearly five years and the gloomiest on the Dow in five months.

As investors ponder their dwindling returns on the year, big events in the week ahead include the government's sometimes unpredictable payrolls report and quarterly earnings from heavy-hitters such as General Motors and Walt Disney Co.

Rob Sellar, head of North American equities in the Philadelphia office of Aberdeen Asset Management, called this week's rout in U.S. stocks a necessary sell-off.

He said it would be unusual for stocks to make new highs, as they recently did, and then go on for another 5 or 10 percent.

You need a bit of a sell-off to clear the air a little, he said. Now, he expects stocks to consolidate around the lower levels reached on Friday.

Investors will be trying to gauge whether the sell-off has left stocks at an attractive level. The S&P's price-to-earnings ratio of 15.3 on a forward basis put stocks at their cheapest level since early April.

At the same time, based on the S&P's earnings yield of 6.5 percent, stocks present a return that is 1.8 percentage points above the benchmark U.S. Treasury 10-year note yielding 4.77 percent.

While some may make the case that valuations are now more reasonable, others are not so sure the worst is over.

This market has looked weak in the past and it's rallied back, said Peter Schiff, president of Euro Pacific Capital Inc., a broker-dealer in Darien, Connecticut. People have been lulled into a false sense of confidence that you can buy these dips.

The Dow Jones industrial average finished the week down 4.2 percent, the Standard & Poor's 500 Index dropped 4.9 percent and the Nasdaq Composite Index declined 4.7 percent.

Year-to-date, the Dow is up 6.4 percent, while the S&P 500 is up 2.9 percent and the Nasdaq is up 6.1 percent.

The culprits for the turnabout from all-time highs to sell-off are many, including a deteriorating housing sector tied to excesses in subprime lending, where borrowers with poor credit were able to get mortgages.

Also, credit spreads, the yield premium over Treasury issues, have gone from unusually small to much wider.

That in turn was blamed for a number of buyouts by private equity firms getting shelved.

It's all about what is the right spread for people to take on a given level of risk, Sellar said. The question now is 'Has it backed up enough?'

HEAVY WEEK FOR DATA

The payroll report will come at the end of a fairly heavy week for economic data. According to the median forecast in a Reuters survey of economists, nonfarm payrolls grew by 130,000 in July after a rise of 132,000 in June.

There are no major economic releases expected Monday, but Tuesday will be busy with new data on personal income, employment costs, the National Association of Purchasing Management-Chicago index, construction spending and consumer spending all on tap.

Tuesday will also bring the quarterly earnings report from General Motors. While Ford Motor Co. surprised Wall Street on Thursday with its first profit in two years, analysts are expecting GM to report a profit of $1.09 per share, compared with $2.03 a year earlier.

Others reporting this week include Walt Disney Co. on Wednesday and Procter & Gamble Co. on Friday.

Tuesday's report from the on Midwest business conditions from the National Association of Purchasing Management-Chicago is expected to show a decline in the index to 58.0 from 60.2.

Wednesday has a report from the Institute for Supply Management on the manufacturing side of the economy, as well as data on pending home sales and reports by manufacturers on car and truck sales in July.

The ISM has a report on the services sector on Friday.

Investment U.S. S&P