Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City.

The frenzied market sell-off last week was driven by human emotion and not algorithm-based trading, according to the CEO of the Nasdaq.

Speaking to CNBC at the World Government Summit in Dubai on Monday, Adena Friedman said: “The foundation of the market movements we have seen over the last several days has been through human emotion.”

At their lows, all three major U.S. indexes slumped into correction territory last week after hitting record highs in January. Financial analysts have long warned that the rocketing bull market of the past year would at some point come to a screeching correction thanks to its highly overvalued stock prices — and it appears last week was the first sign of that, though experts are divided over whether the market has bottomed out or if it has further to go.

Meanwhile, as more and more transactions are made through algorithm trading — also known as algo trading — some strategists have argued last week’s selling could have been prompted by technical mechanisms.

When asked whether it was safe to say humans — and not algorithms — were still in control of market, she replied: “I think humans are definitely in charge of the decisions in the market. I think that the way that the algorithms are written is basically on the back of a human decision.”

‘Welcome correction’

Friedman said strong U.S. economic data in recent weeks had created a “common view” among investors that the Federal Reserve would soon increase interest rates at a faster pace than previously expected.

Adena Friedman, president and chief executive officer of Nasdaq Inc

The Dow Jones industrial average and the SP 500 both lost 5.2 percent on the week, while the Nasdaq shed 5.1 percent as rising interest rates spooked investors. The Dow average experienced two drops of more than 1,000 points and two gains of more than 300 points during this volatile week.

Elsewhere, International Monetary Fund (IMF) Director Christine Lagarde said the volatile market sell-off was not something to worry about. In fact, Lagarde said the view of the Washington D.C.-based institute was that last week’s losses were a “welcome correction.”

— CNBC’s Natasha Turak and Thomas Franck contributed to this report.

Hadley Gamble

News Reporter

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