Investors should look to small-cap stocks as an indicator of the market's direction, veteran trader Art Cashin told CNBC on Tuesday.
The stock market tumbled in early trading Tuesday after the International Monetary Fund downgraded its global growth forecast for the remainder of the year, as well as 2015.
"People are saying that, you know, [it's] going to give [Fed Chair] Janet Yellen more room and we're just moving them down," Cashin, director of floor operations at the New York Stock Exchange for UBS, said on "Squawk on the Street." "The question is, how low will they go?"
The Russell 2000, which tracks small-cap stocks, has been "very sensitive," Cashin said. On Monday, the index failed to surpass Friday's high of around 1,109 points and then led to the downside, he noted.