The outsized yet fleeting move lower in the stock market after the release of Donald Trump Jr.'s emails that set up a meeting with a Russian lawyer was not confirmed in a flight to safer investments such as bonds and gold, Wall Street veteran Art Cashin told CNBC on Tuesday.
The thin summer volume in the stock market seemed to be a playing a role in the late-morning declines, which saw the Dow Jones industrial average off more than 100 points at one stage, the director of floor operations at the New York Stock Exchange for UBS said on "Squawk Alley."
"So you have an overly dramatic effect," Cashin said. "Given that bonds and other things didn't move, I think some of this has to do with market illiquidity for the summer."
"I would have thought you'd see bonds spike a little bit here; the dollar do the same; there would be a rush into gold. It's as if the stock market is the only one who believes that this is more threatening to the government than other things," he added during the heat of the sell-off.
Around 11 a.m. ET on Tuesday morning, Trump Jr. tweeted a chain of emails that said he was offered "high level and sensitive information" that would incriminate Hillary Clinton as part of the Russian government's "support" for his father's presidential campaign. "If it's what you say, I love it," Trump Jr. said in part of his response to the possible information.
As more revelations about Russia and the 2016 election emerge, the GOP policy agenda of replacing Obamacare and cutting taxes supported by President Donald Trump could get bogged down in distraction, Cashin said.
The alleged connections between Trump associates and Russia as well as Russia's meddling in the presidential election do not rise to the level of a Watergate-type scandal, Cashin said.
"It's hard to picture Donald Trump walking in and saying, 'You're right. That's enough. I'm out of here.' It's highly unlikely," Cashin said, recalling how in August 1974 President Richard Nixon resigned as impeachment proceedings were underway.
But the persistent drip of Russia information keeps the story alive for the Trump administration and for special counsel Robert Mueller, the former FBI director leading the wide-ranging Russian investigation, Cashin said. Mueller's "got a full plate now," he added.