The 14-time major winner was eight holes into his final round at the Bridgestone Invitational on Sunday when he decided he was unable to continue.
American Woods, featuring in just his third tournament since undergoing surgery on a back injury earlier this year, revealed he initially jarred his back after a bunker shot at the second.
Clearly in pain, the remainder of the front nine proved challenging for the 38-year-old and Watson said on Monday that the injury "doesn't bode well".
Woods required strong showings at Bridgestone and the PGA Championship to qualify for a Ryder Cup spot, but now looked set to have to rely on a wildcard pick from Watson to feature at Gleneagles in September if he is fit enough to participate .
"Tiger would be a great addition to our team," Watson told SiriusXM PGA Tour Radio.
"As I've said all along, I would pick Tiger Woods if he's healthy and playing well. This doesn't bode well right now.
"I just hope that maybe it's just an isolated problem that he can turn around and possibly play this week at the PGA."