Jittery investors have been looking for a reason to take money off the table following a protracted period of low volatility and as some popular slices of the stock market now look expensive, financial professionals said on Monday.
That largely explains the more than 2 percent decline in major U.S. averages on Friday and the subsequent rebound on Monday, they said.
The sell-off followed comments from Boston Federal Reserve President Eric Rosengren that increased expectations the Fed's policymaking committee could raise interest rates when it convenes next week. Higher yields on government debt would make stocks look less attractive by comparison.
Those worries were compounded on Friday by the announcement of a surprise speech by Fed Governor Lael Brainard. On Monday, Brainard put those worries to rest when she warned against raising rates too quickly.
Tobias Levkovich, chief U.S. equity strategist at Citigroup, said the stock market had become vulnerable as investors grew complacent.
Levkovich noted that investors have rushed into defensive stocks in "an almost desperate search for yield," but those equities grew expensive through last week and remain pricey. Telecommunications and utilities sectors led the declines on Friday, but were both up on Monday.
"As result, I think you just needed a catalyst. It could have been any catalyst," he told CNBC's "Squawk Alley." Had that catalyst not come from the Fed, it could have come from currency markets or geopolitical developments, he added.
O'Neil Securities Director Kenny Polcari said Friday's pullback was a reaction to investors' need to take some money off the table, and Rosengren's comments provided a reason to do just that.
The European Central Bank's decision not to extend the deadline for its quantitative easing stimulus last week also teed up the pullback, he added. But Polcari stressed that the ECB did not scale back its bond-buying program, only decline for the time being to extend the purchases beyond March 2017.
"I agree it is going to be painful when it happens, but I don't think the QE is over yet by any stretch," he told CNBC's "Squawk on the Street."
Chase Chief Economist Anthony Chan said market volatility was simply too low heading into the final four months of the year, a period during which it is historically higher. The suggestion that the Fed could move in September — and potentially again in December — was enough to increase volatility, and for that reason, policymakers are likely to stand pat in September, he said.
"One of the most important tenets … for a central bank is do no harm. The central bank wants to make sure that they normalize without causing havoc, and certainly what we saw Friday was a sneak preview to potential havoc," he told "Squawk on the Street."
Stocks can likely eke out more gains this year so long as the Fed raises interest rates just once and financial conditions remain healthy, he said.
Jim Tierney, AB Global chief investment officer of concentrated growth, said Friday's move had not undermined his confidence in equities. He told "Squawk on the Street" the pullback was long overdue following nearly 50 days of subdued volatility.
He expects more volatility ahead, but rather than focusing on the chances of a rate hike, he said the direction of stocks depends on corporate earnings, which he sees improving significantly in the second half of 2016 and into 2017.