It took the weekend to sink in--the Federal Reserve will probably make its first interest rate increase in December. 

That realization bruised markets on Monday in a delayed response to Friday's strong jobs report, which revived speculation about a hike next month. The betting is now 70% for a December hike, up sharply from 30% several weeks ago, according to CME Group's Fed funds futures.

The reaction was enough to erase the Dow Jones Industrial Average's year-to-date gains and threaten the S&P 500's own. The S&P 500 fell 1.1%, the Dow slid 1.1%, and the Nasdaq declined 1.2%.

Investors have had a glimpse behind the curtain as this new transparent Fed holds the market's hand step by step through its thinking process. There lies the danger, though. 

"Critics of the Fed would argue that the FOMC has simply been too transparent and that policymakers have painted themselves into a corner," said Mark Burgess, global head of equities at Columbia Threadneedle Investments. "If the FOMC itself is not sure about what it should do, it is impossible for anyone else to predict what the Fed will do with any accuracy."

San Francisco Fed President John Williams jointed the chorus of Fed speakers to give his hot take on the economy. The Fed President said on Saturday that policy normalization was the "next step" as the U.S. labor market continues to tighten and inflation moves back to target levels.

"I do think it makes sense to gradually remove the policy of accommodation that helped get the economy to where we are," Williams said at an event for the Arizona Council on Economic Education. Williams declined to say whether he backs a December rate hike.

In earnings news, Priceline (PCLN) fell 9.6% after guiding for a weaker-than-expected fourth quarter. The online travel agency expects fourth-quarter profit no higher than $11.90 a share, well below estimates of $12.42. 

The company weighed on the consumer stocks sector, the worst performer on Monday. Amazon (AMZN - Get Report) , Tesla (TSLA - Get Report) , Netflix (NFLX - Get Report) and Costco (COST - Get Report) moved lower, while the Consumer Discretionary SPDR ETF (XLY - Get Report) fell 1.5%.

Deals talk kept markets moving on Monday. Plum Creek Timber (PCL) shares jumped more than 17% after Weyerhaeuser (WY - Get Report) agreed to buy the company in a deal that would create a $23 billion timber company. Apache (APA - Get Report) rose 12.8% after Bloomberg reported the oil and gas producer received, and rejected, an unsolicited takeover approach. The Houston-based oiler is reportedly working with Goldman Sachs to draft a defense.

Norfolk Southern (NSC - Get Report) jumped more than 10% on reports the railroad company is considering a merger with industry peer Canadian Pacific (CP - Get Report) . M&A talk boosted other railroad stocks including Union Pacific (UNP - Get Report) , Kansas City Southern (KSU - Get Report) and CSX (CSX - Get Report) .