While the selling in stocks appears to have abated for the moment, the trend for the market has been down. The S&P 500 has lost 4.4 percent since reaching an all-time high on Aug. 2, while the Dow is down 5.3 percent.
With all that uncertainty, there are signs that Wall Street's more active players hedge funds, pension funds and mutual funds are heading to the sidelines.
Last week, investors pulled $10.3 billion out of the S&P 500 SPDR, an exchange-traded fund that is one of the most widely held investments on Wall Street, according to fund tracker Lipper. In the same week, institutional and retail investors socked away a combined $10.7 billion in money market funds, the traditional storehouse for cash when investors aren't willing to risk it elsewhere.
Nearly 6 percent of large institutional investors' portfolios are sitting in cash, the highest since 2009, according to research from Citigroup.
Gold has also seen a rebound in interest. Last week, the most widely held gold exchange-traded fund, the SPDR Gold Trust, saw investor inflows for the first time since February.
"The mentality among large investors is that there is a high potential to get caught," on the wrong side of the market, said Chris Hyzy, chief investment officer at U.S. Trust.
Growing geopolitical risk like in Syria is almost always damaging to investor confidence. Investors worry that a U.S.-led attack against Syria could draw the country into Syria's civil war, or worse, fan a larger conflict in the region.
The next big piece of data investors will have to work through comes next week, when Wall Street gets the August jobs report. However, the report is likely to be overshadowed by continued speculation about the future of the Fed's bond-buying program.
"The market is acting a lot like a patient sitting in a waiting room reading a magazine," Hyzy said. "We don't know how good or bad it is, all we know is that the prognosis will come over the next couple days and weeks."
The Fed has been buying $85 billion in bonds a month since December in a move to keep interest rates low and the economy growing. It is widely expected that the Fed will announce a reduction in bond-buying at its next policy meeting, scheduled for Sept. 17-18.
But Syria and the risk of Middle East conflict has raised a new concern for the economy: higher oil prices. Crude oil is up nearly 5 percent this month, most of it coming in the last few days. Oil rose $1.09 to $110.10 a barrel on Wednesday. Costlier oil almost always translates into higher fuel expenses for businesses and consumers, weighing on consumer spending and the economy.
"When you add it all up the problems in Libya, Egypt, Syria you're looking at 3 million barrels a day in potential production outages," said Nick Koutsoftas, a commodities-focused portfolio manager at Cohen & Steers.
Market observers emphasized that for long-term buy-and-hold investors the average American with a 401(k) it's best not to follow professional investors to the sidelines. Lower stock prices could lead to buying opportunities.
"If you're looking out three years, there are a lot of positive things going on," Hyzy said, noting that the economy is slowly recovering, and the U.S. is moving toward energy independence and a revival of manufacturing both of which could create jobs.
"I would buy, if you have a three-year investing horizon," he said.
Lawrence Creatura, a portfolio manager with Federated Investors, said the stock market pullback in August has created opportunities to start picking individual stocks again.
Creatura pointed to the retail industry which has been hit hard by lower profit forecasts and the rise in oil prices as an opportunity.
"Lower prices make some stocks more attractive," Creatura said. "Our analysts are extremely busy."
