UBS' director of floor operations at the NYSE Art Cashin said two things are pushing the Nasdaq lower, causing it to outperform major indexes ahead of Chinese e-commerce giant Alibaba's IPO Friday.
"People are pruning their portfolios away from things that might be competitive [Internet content and Chinese stocks] … and at the same time using that … to raise some funds to buy [Alibaba] at the end of the week," Cashin told CNBC.
The Global X Social Media Index ETF (SOCL), which holds stocks like LinkedIn and Facebook, is having its worst day in two months, down nearly 4 percent midday as investors prepare themselves for Alibaba's offering, which is set to be the largest in history.
There are three main events, in addition to Alibaba's IPO, on market observers' radar this week: The Federal Reserve meeting, the Scottish vote and the European Central Bank's first TLTRO.
"The most critical probably is the FOMC," Cashin said. "That will clearly make or break where we're going in bonds."
Stocks suffered last week amid increasing expectations the Fed may remove a key phrase from its policy statement at this week's meeting that could affect the timing of the first interest rate hike. The debate is whether to remove language saying it will be "considerable time" after the Fed ends quantitative easing, or QE, that it raises rates.
"There are some people who feel the data is mixed enough that she's [Fed chair Janet Yellen] still not certain," Cashin noted. "That's going to make it a real roll of the dice. I think the market will continue to trade timidly."
—By CNBC's Kristen Scholer