Investment guru Mohamed El-Erian warns that the stock market could easily continue to tumble, adding to Thursday’s drastic selloff.

“That is the tug of war that’s going to play out, and it’s going to show the DNA of investors,” the Allianz chief economic adviser told CNBC.

Wall Street's main indexes closed sharply lower on Thursday, marking their deepest one-day declines since June as investors dumped the high-flying technology sector, while economic data highlighted concerns about a long and difficult recovery. 

The Dow Jones Industrial Average fell 807.77 points, or 2.78%, to close at 28,292.73, the S&P 500 lost 125.78 points, or 3.51%, to 3,455.06 and the Nasdaq Composite dropped 598.34 points, or 4.96%, to 11,458.10.

While S&P and Nasdaq's percentage declines on Thursday were their deepest since June 11, it was the Dow's biggest one-day plunge since June 26.

 “We could have another 10% fall, easily ... if people start thinking fundamentals,” said the Bloomberg Opinion columnist and Newsmax Finance Insider.

“If the mindset changes from technicals to fundamentals then this market has further to go,” he added, “but it remains to be seen whether it will change,” he said.

Markets had soared from March lows, powered by fiscal and monetary support hopes for a swift economic recovery. But some participants said investors had become too optimistic.

"Think about the mounting number of risks the market has been shrugging off over the last couple of months here," said Emily Roland, co-chief investment strategist and John Hancock Investment Management. "We're 60 days away from the election. That may be an area where investors are getting a bit spooked," she told Reuters.

She added: "Looking at the data today, the market has had the ability to power higher and hasn't paid any attention to a macro environment which, yes, is improving which is encouraging, but the economy remains fragile here."

• JPMorgan: Markets Brace for Contested Election
• Female Fund Managers Beat Men at Stock Picks: Goldman