Other Asian markets and European shares also experienced a broad-based sell-off on Monday amid China's credit tightening, propelling the fear gauge of European investors to a four-month high.

The People's Bank of China, China's central bank, said Monday in a statement that the country's liquidity remains at a "reasonable" level and commercial banks should strengthen liquidity management. The statement came in a day after the PBOC pledged to continue to implement a prudent monetary policy while fine-tuning it at a proper time.

The PBOC dampened market expectations that it would inject cash into the financial system to cool down spiking domestic inter-bank lending rates and address a slower economic growth.

Adding to the woes, investment bank Goldman Sachs downgraded its forecasts on China's economic growth to 7.4 percent from the previous 7.8 percent for 2013 and cut its 2014 GDP growth to 7.7 percent from 8.4 percent.

More interrelated US, Chinese markets

It is not hard to understand the growing impact of China and the Chinese market on the US and other markets as the world's second largest economy is emerging as a major economic power.

"Traditionally, the US markets have always driven behavior around the globe. I think that has changed somewhat over the last 10 years as the Chinese market and economy have become such a bigger part of what we do globally," Bliss said.

"There are too many interrelationships between the two countries' economies ... We may have political, cultural and ideological differences, but from an economic standpoint, the two countries are coming together very quickly," he added.

However, China is not a sole fundamental factor that will impact the US market. Looking back on the US market's massive run at the beginning of this year, it is fair to say the US market is largely driven by the Fed's stimulus and improving fundamentals of the US economy.