Shanghai selloff hits Wall Street

NEW YORK (CNNMoney.com) -- Stocks opened with modest losses Wednesday in reaction to a hefty selloff in Shanghai prompted by Chinese efforts to cool down their overheated markets.

The Dow fell about 0.4 percent, Nasdaq sank 0.7 percent and S&P 500 also lost 0.4 percent in the opening minutes of trade.

China's benchmark stock index tumbled 6.5 percent after the government hiked the stock trading tax in its strongest effort yet to cool markets there. The Shanghai Composite Index swung wildly before ending the day at 4,053.088 points, its lowest level since May 21. At one stage, it fell as much as 7.4 percent.

In corporate news, IntercontinentalExchange (Charts) reached a deal with the Chicago Board Options Exchange that could give it an edge in its hostile bid for the CBOT Holdings (Charts), the owner of the Chicago Board of Trade.

The are no economic reports due Wednesday morning but at 2 p.m. the Fed will release the minutes of its May 9 meeting, at which it left rates unchanged and cited the risk of inflation as its most pressing concern.

Oil prices were little changed Wednesday after being higher earlier. U.S. light crude gained 1 cent to $63.16 a barrel in electronic trading. The weekly report on U.S. fuel inventories, typically released Wednesday, will be delayed a day this week by the Memorial Day holiday.