After three days of selling, investors are now in a wait-and-see mode.

The Dow Jones industrial average and the Standard & Poor 500-stock index were flat Thursday after each fell more than one percent the day before. Stocks looked poised to continue the sell off Thursday morning, but they rebounded in the afternoon in what financial advisers say is a sign that investors are waiting on the jobs report for a new hint on the strength of the economy.

While it’s not clear what would satisfy investors, advisers say that a mediocre report might be the best way to keep the markets from skidding further. A robust jobs report could put investors on edge by raising concerns that the Federal Reserve may increase interest rates sooner than anticipated. A weak showing may spark fears that the economy is losing its footing.

“Best case, at least in the short term, would be kind of a middle-of-the-road report,” says Curtis Holden, a senior investment officer at Tanglewood Wealth Management, a firm in Houston with $830 million in assets under management.

Small-cap stocks, which are issued by younger companies and are generally considered to be higher risk, saw a 1 percent gain after reaching correction territory Wednesday. The threshold, which means small-cap stocks are more than 10 percent off their July highs, is viewed as a sign that there may not be as much upside left in the broader stock market, which is now up nearly 200 percent from its March 2009 lows.

Investors may be sticking with large-cap stocks in an effort to tamper volatility in their portfolios, financial advisers say. Because they are typically viewed as more stable, large-cap stocks are expected to hold up better than those issued by smaller companies in an environment of slow growth, says Scott Wren, a senior equity strategist for Wells Fargo Advisors. “You want to be in the stocks that have better balance sheets, easier access to credit,” Wren says, “not a one-trick pony.”

Advisers are bracing for more volatility caused in part by worries over slower growth in Europe and Asia and concerns over the Federal Reserve’s next move. Investors may also be growing more cautious following a barrage of bad headlines: including the arrival of Ebola in the United States, the pro-democracy rallies in Hong Kong and trouble in the Middle East.

The dramatic market reaction to news abroad may be caused by concerns over the strength of the financial market at home, advisers say. After a five-year climb, some people may be worried that the market doesn’t have much more room to run.

“I think people are looking at the same chart that I am and they’re wondering ‘how long can this go on?'” says Uri Landesman, president of Platinum Partners, an investment management firm with about $1.35 billion in assets.

There’s no knowing how markets will behave, but advisers say they are expecting more volatility. September and October are historically rocky months for equity performance, Wren says. Stocks tend to perk up by November, December and January, but that isn’t always the case, he cautions. And investors shouldn’t make decisions based on those trends, but rather focus on whether they think the economy is on more stable ground.

“The economy is good, not great,” Wren says. “When you have modest growth and a modest inflation environment, stocks can do fine in that.”

Few advisers recommend getting out of the market completely, but with the chance that volatility may pick up, it might be a good time to re-assess portfolios. Holden recommends people move into assets that tend to have more stable performance. That means buying more U.S. stocks versus those from Europe and emerging market countries and relying more on large-cap stocks than small-cap stocks, he says.

“We’re not going to tell someone they need to run for the hills,” Holden says. “Don’t make rash or drastic moves. But at the same time, know what you own. Know why it’s there.”

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