The decline in stock prices that took the Dow Jones Industrial Average down nearly 7 percent so far in May may continue, says Mohamed El-Erian, CEO of money management titan Pimco.

Investor fears that the European debt crisis will stunt global economic growth could spark a sustained swoon by stocks, he says.

“This is not a typical retracement,” El-Erian said.

“We are in uncharted waters on account of several issues, including what is going on in Europe and other important structural regime changes," he told Bloomberg.

"In economic terms, European developments are unambiguously bad for global growth.”

European and Asian stocks tumbled too, as many investors concluded Europe will be unable to get its act together.

The rattled investors fled to Treasury bonds as a safe haven, sending the 10-year Treasury yield down to a one-year low of 3.10 percent.

Triple-digit Dow moves became common again during the month as investors grappled with concerns that mounting debt in Europe might upend a global economic recovery, the Associated Press reported. Because of those worries, most of the big moves during the month were drops. The Dow has fallen 6.8 percent in May.

Domestic economic reports have taken a back seat to questions about whether countries like Greece, Spain and Portugal will be able to implement steep budget cuts to contain growing deficits. Analysts say even if the countries are successful in reducing debt, cost-cutting could be a major drag on the economy.

El-Erian expects that trend to continue.

“This will amplify the impact of higher global risk aversion,” he said.

“Some areas — like the U.S. Treasury bond market — will also feel the impact of capital inflows on account of flight-to-quality. After over-emphasizing the cyclical tailwinds, markets around the world are now pricing in the structural headwinds in a rather volatile fashion.”

Star economist Nouriel Roubini sides with El-Erian on stocks, looking for a 20 percent drop.

"There are some parts of the global economy that are now at the risk of a double-dip recession," the head of Roubini Global Economics told CNBC.