The stock market has not reached its bottom yet, even as Wall Street headed higher Tuesday after historic declines, economist Mohamed El-Erian told CNBC.
"It's going to be very volatile but around, unfortunately, a downward trend for now," the chief economic advisor at Allianz said on "Squawk Box."
El-Erian's comments came as U.S. futures were pointing to a bounce at Tuesday's open after President Donald Trump suggested economic stimulus measured could be taken to mitigate the financial pain brought by the coronavirus outbreak.
However, by late morning, the index sank in and out of negative territory.
The Dow's decline of 2,013.76 points Monday was its biggest drop ever on a points basis, and its decline of 7.79% was the largest since Oct. 15, 2008.
El-Erian has for weeks been cautioning investors against buying market dips as they've been conditioned to do in recent years because it's a strategy that's worked.
On Monday, before the stock market opened, he said stocks could fall up to 30% from last month's highs before reaching their bottom. As of Monday's close, the Dow, S&P 500 and Nasdaq Composite were around 19% below their all-time highs, which they reached in mid-February.
The former CEO of investment powerhouse Pimco said that Tuesday's bounce didn't change his views of the market landscape. "I don't think we've made the lows yet, but it is going to be incredibly choppy."
El-Erian warned investors against the "economics of fear" as confirmed cases of COVID-19 continued to rise.
"How will you and I react? Are we going to exaggerate the downward trend? Are we going to de-engage from the economy at a faster rate?" El-Erian asked. "If we do, it's going to be pretty messy."
There are more than 114,000 confirmed cases worldwide. While the disease originated in China, which still has the most cases by far, Italy has confirmed more than 9,000 cases there. The U.S. has more than 750 cases.
Correction: There are more than 114,000 confirmed cases worldwide of the coronavirus. An earlier version misstated the figure.