Profit-taking emerged as a key factor in Friday’s market decline, with major indexes experiencing losses. Large tech stocks, including Tesla and Amazon, continued to face challenges on Monday, each falling by over 1%.

Tom Lee, head of research, shared his thoughts on Monday during a "Squawk Box" appearance, noting, “While this decline is somewhat disappointing, it's largely due to profit-taking and some uncertainty surrounding the Federal Reserve. However, I remain optimistic that 2025 will bring significant positive momentum.”

The pullback in tech stocks could also be linked to bond market movements, particularly the 10-year Treasury yield, which rose above 4.6% last week but eased back on Monday morning.

Investors are hoping that stocks will stabilize and trigger a "Santa Claus Rally," a market trend that typically sees gains in the final five trading days of the year and the first two days of January. Historically, since 1950, the S&P 500 has averaged a 1.3% return during this period, according to LPL Financial.

However, Lee cautioned against overreacting to any weakness in the markets as the year wraps up. "Given the lower liquidity as we approach the end of the year, a slow week can often set the stage for a strong rebound in early January," Lee explained.

The days ahead are expected to be light in terms of economic data, with the market closing on Wednesday for New Year's Day.

Monday’s market opened significantly lower, with the Dow briefly plunging more than 500 points in the first few minutes of trading.