Chinese stocks dropped more than 8 percent Monday as investors around the world question China's economy. It's the biggest one-day fall since the global financial crisis of '07 and '08.
The crash has triggered a global sell-off.
The news comes after last week's sharp declines, with the Shanghai Composite Index losing more than 11 percent of its value in only five trading sessions. With the addition of Monday's tumble, all of the Chinese market gains made this year have been wiped out.
The main cause of the market meltdown: investor money pouring in to Chinese stocks as China's economy keeps slowing down and company profits get weaker.
Investors around the world are reacting to China's economic problems.
Last week, the Dow Jones industrial average dropped more than a thousand points - its worst week since 2011.
However, some analysts believe the stock market is simply undergoing a much needed "correction," and they expect it will bounce back.
"We've gone 46 months without a decline of 10 percent or more, which is very long compared with the 18-month average," Sam Stovall, chief equity strategist for S&P Capital IQ, noted.
"The stock market traditionally has volatility," he said. "We've actually experienced a very limited amount of volatility in the past several years and now I think investors are getting unnerved because we are getting back to normal."
But others fear this is a bear market, which would mean stocks would keep heading lower in the months ahead.
The Federal Reserve is another factor in the market meltdown. It's been signaling that with an improving economy it could start raising rates to keep inflation in check.
Many investors feel it's too early for a rate increase because global economic growth is slowing down. A rise in rates could make things worse.
"This is probably the worst time for the U.S. to raise interest rates, just because for the sake of it, because global economic growth rate is falling, and maybe in recession," Francis Lun, CEO of GEO Securities Limited, explained.
For now, analysts say it will just take a little time, and investors will wait for the smoke to clear so they'll be able to see where stocks are going in the months and years ahead.
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