The Nasdaq 100 (^IXIC) fell 1.7% Tuesday, recording its third-worst start to the year since 2001. Megacap tech stocks were among the worst performers of the session following Barclay's downgrade of Apple (AAPL).

But investors shouldn't be too worried about the market's lackluster first-day performance because a pullback 'makes sense' following the recent rally, according to Invesco Chief Global Market Strategist Kristina Hooper.

"We're going to naturally have jitters around any kind of data releases right now as we wait for that true policy pivot," Hooper said.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

SEANA SMITH: Let's talk more about the moves that we're seeing in equities. Big tech once again lower today, now, the move coming after yesterday's tumble, which marked the worst first trading day for the NASDAQ since 2016. Here with more of what we could expect going forward, we wanna bring in Kristina Hooper, Invesco's Chief Global Market Strategist.

Kristina, it's great to have you here. So I think investors are maybe a bit nervous about what the next several weeks, several months could potentially look like following yesterday's sell-off. What do you think?

KRISTINA HOOPER: Well, I don't think there's that much cause for concern because we have to look at the reasons why we're seeing that tech sell-off. First of all, we had a really strong rally. So it makes sense that there would be some digestion.

The real catalyst, though, has been an increase in rates. And that's really about fears around the FOMC minutes coming out today as well as the jobs report on Friday-- essentially-- as well as we're getting a little Fed speak, the talkish, you know, more rates aren't off the table.

But we have to recognize that that's part of a process in which we are seeing this pivot occur. The Fed has a real reason, a genuine interest in tamping down the easing of financial conditions. So they're gonna to talk hawkish. We're going to naturally have jitters around any kind of data releases right now as we wait for that true policy pivot. So to me, this is a pretty short-term blip.

MYLES UDLAND: And, you know, Kristina, in looking at 2024, you look back at last year. And one of your big takeaways is that it's really all about monetary policy and where things come down for the Fed.

And I do wonder, is that-- and we've talked about this a little bit in the office. Is that something that is always the case? Or is that just this moment in time? And how do you see that playing out, I guess, not just this year but thinking over this full cycle?

KRISTINA HOOPER: So it depends on how old you are. I'm old enough to tell you that's not always the case. But if you came of age during the global financial crisis, it has been the case since then really. Monetary policy has dominated and driven markets.

And especially as we transition from an ultra-low extraordinarily abnormal rate environment to a more normal rate environment, there's likely to be a lot of, shall I say volatility and uncertainty. And that's what we're experiencing. But I think that there will be a point where monetary policy won't have such an outsized role. We're just not there yet.