Wall Street losses deepened Monday after last week's slip, as stocks around the world were sold off amid fears over the cash squeeze in China and the U.S. Federal Reserve's possible tapering of its bond purchases later this year.

In midday trading, the Dow Jones Industrial Average slipped 203. 09 points, or 1.37 percent, to 14,596.01 points. The Standard & Poor's 500-stock Index shed 28.47 points, or 1.79 percent, to 1, 563.96 points. The Nasdaq Composite Index fell 54.03 points, or 1. 61 percent, to 3,303.22 points.

The U.S. stocks opened lower and retreated further as the Shanghai Composite Index tumbled 5.3 percent Monday, the biggest drop since August 2009. The Chinese benchmark stock index lost over 20 percent from its previous peak to enter a bear market.

The People's Bank of China, the country's central bank, refrained from pumping cash into the market despite a liquidity tightening as the Chinese central bank acted in an attempt to move the economy away from credit driven investment.

The Japanese Nikkei ticked down 1.3 percent and European stocks closed sharply lower Monday on the heels of a heavy selling in Chinese stocks.

The Dow and the S&P 500 lost 1.80 percent and 2.11 percent last week, respectively, their second worst weekly losses this year as Fed Chairman Ben Bernanke hinted in a news conference Wednesday following a two-day policy meeting that bond buying could be reduced later this year, depending on conditions.

Dallas Fed President Richard Fisher is scheduled to deliver a speech on U.S. monetary policy this afternoon.

The economic data came in a little positive Monday, but failed to provide momentum to the market.

Texas factory activity increased sharply in June, according to the Federal Reserve Bank of Dallas. The production index, a key measure of state manufacturing conditions, rose six points to 17.1, the highest reading in more than two years.

The Chicago Fed National Activity Index, a monthly index designed to gauge overall economic activity and related inflationary pressure, stood at minus 0.30 in May, up from minus 0. 52 in April.

Source: Xinhuanet