Art Cashin says investors should be careful amid market rebound, watching a key level on 10-year yield

A rebound in the 10-year Treasury yield could weigh on stocks, putting a dampener on the market's recent rally, according to veteran trader Art Cashin. “I think that the Fed officials don't necessarily want to play Grinch, but they are being bothered by the fact that the market is getting more optimistic,” said Art Cashin, director of floor operations at UBS, warning that the recent upbeat sentiment may be stretching too far. He spoke on CNBC's ” Squawk on the Street ” Friday morning. “I would be a little careful here. I would watch that yield on the 10-year…. We may get another retest of the higher level in yields, while all that Fed jabber is going on,” he added. If the yield on the 10-year Treasury note begins to move above 4.55%, Cashin said that could put “mild pressure” on the equity markets. The benchmark 10-year yield was last 6 basis points higher at 4.482% on Friday, pulling away from the two-month low reached before the Thanksgiving holiday, which was influenced by hopes that the Federal Reserve may be done raising interest rates. Traders have similarly been enthused by the prospect of no more rate hikes, Cashin noted. Stocks have rallied this month, and the major averages are aiming for a four-week winning streak. The S & P 500 has jumped 8.6% in November. “We've had lifted spirits. You can see that the tone of many of the commentators who were getting more and more bearish and now are stepping back from that,” Cashin said.