Aon Hewitt reports the days leading up the last-minute agreement on the debt ceiling sparked activity from plan participants. Trading levels have reached significant levels, and transactions have turned toward fixed income investments from equities, which is an indication that workers have been highly reactive amidst continuing uncertainty.

This level of activity, Ewen says, is unusual. Average plan participants typically show slim levels of response, with about one in five making a trade. Overall, reactionary activity has been slowly leveling out since the financial meltdown.

But all the talk on the debt-ceiling crisis got investors nervous. Aon Hewitt's database of more than 100 401(k) plans, representing 4.7 million workers shows a marked increase in 401(k) trading volume since July 25.

On a typical day, daily trade volume reaches $300M to $400M in trades. Late last week, trading volume was two-to-three times the normal level, reaching a peak of more than $900M on Thursday, July 28. Trading volume remained high on Monday, reaching $862M, as Congress moved closer to reaching a compromise.

According to Aon Hewitt's 401(k) Index, fully 96 percent of assets moved into fixed income last week, the third highest monthly transfer amount out of equities and into fixed income investments since Aon Hewitt began tracking this data in 1997.

As soon as the ceiling was raised, investors then turned their focus on the economy, and the selling accelerated, according to the Associated Press. Then on Friday, global stocks rebounded and investors could finally breathe a sigh of relief on news that the U.S. added more jobs than expected in July.

That lasted for about 10 minutes.

According to an AP report, after its early rise, the Dow fell more than 400 points and was down 243 just before noon. Then it rose nearly 400 points in less than an hour and was up 135 points. The rest of the day, the blue-chip stock index bounced up and down, sometimes by as much as 100 points in less than half an hour. It ended the day up 61 points, or 0.5 percent.

Stocks have been "like a tether ball being smacked around the pole" by worries about weakening economies around the world, Sam Stovall, chief investment strategist for Standard & Poor's Equity Research, told the Associated Press.

"The burden of debt has become much more onerous because the outlook for growth is sliding back," adds Don Smith, economist at ICAP, the largest inter-dealer broker in the world. "That is very concerning for the markets. The fear is ultimately about defaults and business failures."

Evens wouldn't speculate on his predictions for another sink into recession—there's no crystal ball for that, after all. But his advice for this particular seesaw in the markets is simple: don't panic. A gut reaction to volatility isn't exactly the best approach. Ideally, an allocation with upside potential and downside protection is what you want to aim for, but it's more important to understand how that allocation can fit long-term goals.

What else can you do? Associated Press personal finance writers Dave Carpenter and David Pitt have some suggestions:

1. Stocks on sale?

Historically the stock market is the best means to ensure that your savings outpace the rise of inflation — though that's been minimal in recent years.

Many investors have fled to cash alternatives like money-market accounts or certificates of deposit. These investments return almost nothing right now and for a while on Thursday U.S. Treasury yields were actually negative, meaning investors were paying the government to hold their money for them.

2. Play defense

When the economy gets tough investors typically flock to large companies with strong balance sheets. That's because these companies have the reserves and track record of being able to ride out economic downturns. Investors are drawn to the stability of their reliable earnings.

Certain sectors are also more defensive than others. If you're anxious about a faltering economy, consider consumer staples stocks. These include food companies and the makers of everyday household products. This sector is among the highest dividend yielding sectors in the S&P 500 with a current yield of a little more than 3 percent.

You could also buy into the old adage that when times are tough people drink beer and when times improve, they drink better beer. So take a look at companies like Anheuser-Busch InBev, the Belgium-based maker of 200 brands. Shares are down 9 percent in the past three months but rose $1.15, or 2 percent, on Friday to $54.32.

Global companies that make equipment for farmers, construction and other industries like Caterpillar Inc. and Deere & Co. also offer some cover in tough times.

Also look at utilities, which have a dividend yield currently of about 4 percent. This sector is one of only three of the S&P 500′s ten industry groups to show growth for the year. The other two were health care and consumer staples.

Health care is traditionally a defensive move, but be aware that some companies in that sector could be affected by government spending cuts.

What playing defense doesn't mean is running to gold, said Richard Barrington, a financial analyst and personal finance expert at MoneyRates.com. Gold, he says doesn't produce earnings or dividends and since its up fivefold in the last decade, it could be a bubble ready to burst.

3. Bonds Overbought.

Investors have continued to pour into U.S. Treasury bonds for safety even though they have lost considerable allure as an investment. Heavy demand pushed the yield on the 10-year Treasury note to 2.42 percent Friday, its lowest of the year. Treasurys are overbought and investors should make sure they're not too loaded up on them because they don't offer good value right now, said George Rusnak, national director of fixed income for Wells Fargo Wealth Management.

Municipal bonds, issued by local governments to help pay for schools, hospitals, roads and bridges, are not necessarily the best place to be at the moment either, he said. The yield for 10-year munis with a Triple-A rating was 2.35 percent, close to the all-time low set last August. Yields fall when demand increases.

Investors, he said, would be better off in corporate bonds of large industrial companies that pay coupons — semiannual interest payments.

And with interest rates poised to rise at some point down the road, they should not buy bonds that mature more than five years from now or they'll be stuck with today's rates.

4. Mixed international outlook

Fund managers still advise keeping a portion of your portfolio in international investments. But the worsening debt drama in Europe makes it worth checking your holdings to make sure you're not over-reliant on companies in developed countries. Emerging markets have delivered impressive gains for international investors for years and promise to continue to do so over the long term. They too, however, have had their issues lately. The iShares MSCI Emerging Markets index, a key indicator reflecting nearly two dozen developing markets including China and India, plummeted 13 percent in the last two weeks and is down 15 percent for the year — 10 percent more than the S&P.

Further weakening in the global economy will hurt exports from emerging markets countries. But companies and funds there still have stronger balance sheets and remain a better bet than their counterparts in developed countries, notes

Arlene Rockefeller, president of the TruColor Capital Management hedge fund in Newton, Mass. The key is to be aware of, and comfortable with, the high volatility in emerging markets and have a plan in place to deal with it.

5. Shelter money in cash?

Shifting a portion of your money to cash or low-risk investments like money-market mutual funds can ease a potential hit from the stock market. It's important to keep in mind that after stocks lose half their value, it takes a 100 percent gain — not 50 percent — to get back to where you started.

But should stocks rebound, a move into cash now could lock in losses and prevent full participation in a rising market. If you shift money to the sidelines, do so for safety, rather than expectations of seeing your money grow. You'll earn next to nothing from cash these days, wherever you're stashing it in the bank, or in a money fund. Blame low interest rates, a consequence of the slow economic recovery, and the Federal Reserve's policy to keep interest rates low to stimulate the economy.

The low rates mean banks can't earn much from deposits, so they're not paying much interest to customers. For example, the best rates available nationally for six-month CDs are about 1 percent. Longer-term CDs pay more, around 2 percent now for 5-year CDs. But be careful about locking in too much money — you'll pay fees for any early withdrawals.

One way to avoid problems with tying up your savings is to set up a "ladder" of CDs with staggered maturities. Money-market funds aren't able to earn much, either. Their returns are now averaging around 0.02 percent — $2 a year for each $10,000 invested.

The outlook for higher returns may improve if the economy comes back, and the Fed raises rates. But those prospects now appear less likely due to the recent spate of disappointing economic news.