US market will have an 'ugly' day Wednesday if China goes into 'free fall' again: Veteran trader Art Cashin

  • Traders were bargain hunting on Tuesday but if China doesn't support its market or stocks drop again it will be an ugly day on Wednesday, says Art Cashin of UBS.
  • However, the Dow Jones Industrial Average staged a comeback Tuesday afternoon, closing 126 points lower.
  • The blue-chip index traded as low as 584.62 points earlier in the day.

U.S. stocks could sell off on Wednesday if China's market falls again, veteran trader Art Cashin told CNBC.

He attributed Tuesday morning's drop in U.S. equities largely to Chinese stocks decliningand a Chinese official telling American investors that Beijing did not "fear" a trade war with Washington.

However, the Dow Jones Industrial Average staged a bit of a comeback Tuesday afternoon, closing 126 points lower. The blue-chip index was down as much as 584.62 points earlier in the day.

Cashin, UBS director of floor operations at the New York Stock Exchange, told "Closing Bell" that traders were bargain hunting after the morning's rout.

However, "if China doesn't support its market or goes into free fall again, we'll have an ugly day tomorrow," said Cashin, a CNBC contributor.

Kenny Polcari, director at O'Neil Securities and a CNBC contributor, was one of those buyers on Tuesday.

"Even when we were at the complete lows on the day there wasn't this sense of panic at all," he told "Power Lunch" before the market close.

The S&P 500 dropped 0.6 percent Tuesday, its fifth straight decline. The Nasdaq Composite, which hit correction territory earlier in the day, climbed back up slightly to close just 0.4 percent down.

The major indexes are all down at least 4.7 percent for October.

Cashin began his career at Thomson McKinnon in 1959. In 1964, at age 23, he became a member of the NYSE and a partner in P.R. Herzig & Co.

CNBC's Fred Imbert contributed to this report.

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