That sound you heard Tuesday morning was a "sigh of relief" from traders after they saw headlines that Russian troops would cease exercises along the Ukrainian border, UBS' Art Cashin told CNBC. The news sent stocks sharply upward and easily helped make up losses from Monday's selloff.
A Ukrainian report Monday that Russian military brass would issued an ultimatum directing two Ukrainian warships to stand down "spooked" Wall Street and caused wide selling in stocks and a sharp rise in gold prices, Cashin added during an interview on "Squawk on the Street." The heated geopolitical crisis, which pits Western powers and Ukraine's newly created pro-European Union government against Russia and its supporters in Crimea, seemed to cool slightly Tuesday morning.
Before U.S. markets opened, Russian President Vladimir Putin ordered troops in western Russia to return to base, easing fears of war—at least for the time being, Cashin said.
(Read more: Markets may have made Putin blink: Pro)
"I don't think all of this is going to go away," Cashin said. "I think Putin will take to the streets, aiding and abetting pro-Russian demonstrations, in the cities. That I don't think will be a market factor. They came very close to what they thought was military [conflict], and if that's not going to happen there's a sigh of relief."
Cashin doesn't see gold prices returning to normal levels as long as the Russian-Ukrainian tensions persist. Gold on Tuesday morning dipped about 1 percent after rising 2 percent on Monday. There's "skepticism and cynicism" among market professionals because of the lingering presence of Russian troops in the Crimean Peninsula region of Ukraine, a pro-Russian territory along the Black Sea, Cashin said.
Investors should continue to monitor 10-year U.S. Treasury notes to measure the level of fear in the markets, Cashin said.
On Tuesday, Secretary of State John Kerry traveled to the Ukrainian capital Kiev and announced his support of an economic aid package for the new government. If the White House favors Ukraine too much in any response to the Crimean crisis, that could spell trouble again on Wall Street, Cashin said.
"They have to walk a little bit of a fine line," Cashin said. "If they look they are taking them into a full embrace, that will reignite things."
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters contributed to this report.