On its second try, the U.S. House of Representatives easily passed the bill and U.S. President George W. Bush signed it into law shortly afterward.

Equity markets surged at the open despite a worse-than-expected U.S. employment report. Moments before lawmakers began voting on the proposal, stocks hit session highs, with the S&P 500 up 3.2%.

Moments after the vote succeeded, markets began to turn around. Equities fell, Treasuries rallied and the U.S. dollar softened. The S&P 500 fell 4.5% from the time voting on the bill began at 1:10 p.m. EDT and the market close.

Toronto's S&P/TSX composite index closed down 97 points to 11326 after being up by as much as 452 points. The Dow Jones industrial average closed down 157 points to 10325, the S&P 500 closed down 15 points to 1099 and the Nasdaq was down 29 points to 1947. All closed at multi-year lows.

David Watt, senior currency strategist at RBC Capital Markets, said the sudden selloff could have been a case of buying the rumour and selling the fact. He also wondered if the approval prompted investors to look ahead.

"Maybe it's a case of reflection on a key issue -- it is far from clear that Treasury will be successful. This question did not have to be given serious consideration when the fate of the bill was unclear. There is no excuse now," Watt wrote in a client note.

Others threw their hands in the air at what continues to be a mercilessly volatile market. "Go figure," one strategist said.

Market watchers also expressed disappointment that it will take four weeks for the Treasury to begin buying distressed assets. The timeline was a surprise, given the urgency with which the bill was passed.

"Four weeks is an eternity," said David Ader, U.S. government bond strategist at RBS Greenwich Capital.

But with the drama of the bailout package finally in the rear-view mirror, many market watchers moved on to speculating about monetary policy.

In the coming week, the Bank of England and Reserve Bank of Australia are expected to lower rates. There is also speculation the Federal Reserve will announce an inter-meeting rate cut.

Fed Chairman Ben Bernanke released a statement to applaud the bill after it passed, but included a line that some say hinted at further action from the Fed.

"We will continue to use all of the powers at our disposal to mitigate credit market disruptions and to foster a strong, vibrant economy," Bernanke said in the statement.

Some traders disregarded Bernanke's comment, but others said he is preparing markets for an interest rate cut.

"He just told us there could be a rate cut on Monday," said Sean Murphy, bond trader at RBC Capital Markets in New York.

Ashraf Laidi, chief currency strategist at CMC Markets, said he doesn't believe the Fed will do an inter-meeting cut unless equity markets tumble.

"The stock market is going to try to force the Fed's hand," he said.

Deteriorating worldwide economic data continue to force their way to the forefront. On Friday, the September report on U.S. nonfarm payrolls showed the economy shed 159k jobs. It was the ninth consecutive decline and worst job loss since March 2003. It was also worse than the 105k decline expected.

"This shows that the real economy is suffering more and more, and the scope of the troubles extends beyond the credit market and the financial sector," said Francis Généreux, senior economist at Desjardins.

The afternoon selloff in North American equity markets concludes a dreadful week on stock markets. The Dow Jones Industrial Average fell 7.3% on the week, the S&P 500 was down 9.1% and the TSX composite index lost 10.9%.

Crude oil fell $12 on the week, wiping out the modest gains of the previous two weeks.

U.S. sovereign debt rates had a massive weekly drop. Two-year yields declined to 1.58% from 2.10% in the biggest one-week basis point decline since the 9/11 attacks. Ten-year yields fell to 3.60% from 3.86%.

The Canadian dollar was down 0.0025 to 0.9249 against the U.S. dollar (1.0816 USD/CAD) and down 0.29 to 97.29 against the yen.

The U.S. dollar was down 0.10 to 105.24 against the yen and the Dollar Index was up 0.100 to 80.539.

The euro was down 0.0028 to 1.3791 against the U.S. dollar, unchanged at 1.4915 against the Canadian dollar, down 0.0058 to 0.7776 against the pound sterling and was lower by 0.42 to 145.13 against the yen.

The pound sterling was up 0.0099 to 1.7738 against the U.S. dollar and up 0.0134 to 1.9176 against the Canadian dollar.

WTI crude oil was down $1.29 to $92.68. The front month gold contract at the Chicago Board of Trade was down $7.40 to $839.50 per ounce.

U.S. two-year yields were down 3.4 bps to 1.58%, with five-year yields down 3.1 bps to 2.63%, 10-year yields down 2.3 bps to 3.60% and 30-year yields down 6.2 bps to 4.09%. The Eurodollar March 09 contract was up 29.0 ticks to 97.56. The yield curve was steeper, with the 10/2-year spread up 0.5 bps to 201.70 bps.

Yields on two-year Canadian government bonds were down 8.1 bps to 2.51%, with five-year yields down 8.1 bps to 2.94%, 10-year yields down 7.6 bps to 3.71% and 30-year yields down 5.3 bps to 4.09%. The December 08 BAX contract was up 13.5 ticks to 97.20.

In Germany, returns on two-year German bonds were down 1.2 bps to 3.28%, with five-year yields down 1.4 bps to 3.60%, 10-year yields down 0.8 bps to 3.92% and 30-year yields down 5.5 bps to 4.37%.

Yields on UK two-year bonds were up 7.3 bps to 4.03%, with five-year yields up 3.7 bps to 4.14%, 10-year yields up 3.3 bps to 4.40% and 30-year yields down 2.2 bps to 4.36%.

Toronto's S&P/TSX composite index closed down 97 points to 10803, the Dow Jones industrial average closed down 157 points to 10325, the S&P 500 closed down 15 points to 1099 and the Nasdaq closed down 29 points to 1947.

All data taken at 4:41 p.m. EDT

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, This email address is being protected from spam bots, you need Javascript enabled to view it

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