A report suggesting the U.S. economy contracted at a much steeper pace than previously estimated in the first quarter only added to concerns about the economic recovery, veteran trader Art Cashin told CNBC on Wednesday.
GDP fell at a 2.9 percent annual rate, instead of the 1.0 percent pace it had reported last month, reports the Commerce Department.
Read MoreUS economy contracted sharply in Q1
"It raises a concern that we've had and expressed before and that is, if the economy were to suddenly hit stall speed, and it's coming reasonably close, or if there was an exogenous event, what latitude does the Fed have?" Cashin, director of floor operations at the NYSE for UBS, said on "Squawk on the Street."
Seeking to stimulate the economy by lowering borrowing costs, the Federal Reserve currently maintains a monetary policy known as quantitative easing, which includes bond-buying and a near-zero interest rate policy. But the central bank is trying to wind down its stimulus program, leaving traders to speculate on its next move, Cashin said.
Regardless, Cashin said the key level on the Dow Jones industrial average is between 16,970 and 16,980. The Dow hit resistance at that level three times this month, he said.
—By CNBC's Drew Sandholm, with Reuters.