With U.S. equities on track for a 3 percent weekly drop, investors should watch what commodities are doing, Art Cashin said Friday.
The Wall Street veteran noted that most of the sector's major benchmarks are in a state of advanced decline, which may portend bad news for the economy as investors await the Federal Reserve's next move.
"I'm worried about what we have is a near deflationary free fall going on in commodities," the UBS director of floor operations at the New York Stock Exchange told CNBC's "Squawk on the Street." Deflation is a prolonged slump in prices that is seen by economists as a sign of economic trouble.
The fall within the commodities space has been a partial contributor to the tumble in stocks this week. Oil is currently on track for an 8 percent loss, last trading near $40.40 a barrel.
"Commodities ... does not look very good, and it's the same old story," Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, told CNBC's "Power Lunch" on Friday. "It's a supply-demand based situation. Capacity is built on a China that grows north of 10 percent; that's not happening, it's not going to happen, so it's going to take a while for this supply-demand imbalance to work out."