One could almost tell from the way the headlines were changing throughout the Asian and European sessions early Monday that U.S. stock market investors were facing a wall of uncertainty. Investors don’t like uncertainty. They like certainty or something close to it. But was it uncertainty or confusion that encouraged investors to lighten up on the long side on slowest trading day of the year for the Dow Jones Industrial Average. In fact, the last three Dow trading sessions have produced well-below average volume at 229.38M, 229.55M and 233.04M.

In the cash market, the benchmark S&P 500 Index settled at 2895.77, up 3.03 or +0.11%. The blue chip Dow Jones Industrial Average finished at 26341.02, down 83.97 or -0.32% and the technology-based NASDAQ Composite ended the session at 7953.38, up 15.19 or +0.20%.

U.S. Non-Farm Payrolls Report Reaction

The confusion started early Monday during the Asian session when investors bought stocks on the back of Friday’s “strong” U.S. Non-Farm Payrolls report. However, after the initial surge, sellers came in to stop the rally and the bidders pulled orders, causing most of the major indexes to turn lower for the session.

Stocks began to sell-off when investors probably realized the report was actually mixed with payrolls beating expectations, and average hourly wages missing to the downside. The latter raised doubts about the strength of the U.S. economy because falling wages tend to indicate slower inflation or growth.

This assessment spread to Europe and the U.S. pre-market futures session, setting the tone for a weaker start to cash market trading in the U.S.

Worries Over Lower Earnings After Being Warned

Another factor contributing to the weakness were reports circulating that said investors should expect the worst quarterly earnings season in three years. One again, investors acted as if this was news after it had been telegraphed for weeks by companies lowering guidance and analysts issuing warnings.

The problem for most investors and why earnings season could turn ugly over the next few weeks is that most investors have been locked in on the interest rate story. What are the other central banks doing? Why did the Fed turn dovish and say it wouldn’t raise rates this year? These types of headlines and questions have been on the minds of investors all year, which probably left no room to consider the possibility of lower earnings.

Hypnotic Effect of China Deal, Brexit Headlines

Investors also may have been lulled into following U.S.-China trade negotiations and numerous Brexit headlines too closely. This may have had a hypnotic effect on their trading rational. With investors locked in on these two events, and the interest rate story, they may have become numb to other major factors that could influence the price action greatly over the near-term like a weak earnings season.