Wall Street opens sharply lower on China, North Korea worries

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All three major indexes fell more than 1 percent in early trading on Wednesday as investors looked for safe havens after China allowed its currency to weaken further and oil prices fell to their lowest in more than 11 years.

Investors were also nervous about rising geopolitical tensions after North Korea said it had successfully tested a hydrogen bomb and Saudi Arabia cut ties with Iran.

READ MORE: North Korea says successfully conducts first H-bomb test

The People's Bank of China on Wednesday set the yuan's official midpoint rate at its weakest level in 4-1/2 years, while a PMI survey showed services sector activity expanded at its slowest rate in 17 months in December in the country.

Gold hit a four-week high, while the U.S. dollar touched a one-month high against a basket of major currencies.

"While geopolitical concerns generally aren't long lasting, rising incidents have investors and the markets concerned," said Peter Cardillo, chief market economist at First Standard Financial in New York.

RELATED GALLERY: See photos of the North Korea Punggye-ri Nuclear facility

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Wall Street opens sharply lower on China, North Korea worries
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - DECEMBER 12th, 2015: Figure 1B. Dual mining cart tracks established at new tunnel site. Date: December 12, 2015. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - DECEMBER 12th, 2015: Figure 2B. Activity at the North Portal spoil pile. Date: December 12, 2015. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - MARCH 27th, 2015: Figure 2a. No camouflage covering the West Portal tunnel entrance at the Punggye-ri Nuclear Test Site in North Korea. Date: March 27, 2015. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - MARCH 27th, 2015: Figure 6a. Construction material visible at the Main Support Area at the Punggye-ri Nuclear Test Site in North Korea. Date: March 27, 2015. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - MAY 16, 2015: Figure 1. Low level of activity at the West Portal at the Punggye-ri Nuclear Test Site in North Korea. Date: May 16, 2015 (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - MAY 16, 2015: Figure 5. Areas that have been logged at the Punggye-ri Nuclear Test Site in North Korea. Date: May 16, 2015. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - APRIL 9th, 2015: New Nuclear Test Tunnel Under Construction at North Koreas Punggye-ri. Figure 2. Construction related to a new portal at North Koreas nuclear test site. Photo date: April 9, 2015. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - MAY 16, 2015: Figure 6b. An old building has been re-roofed and a new building has been erected at the Main Support Area at the Punggye-ri Nuclear Test Site in North Korea. Date: May 16, 2015 (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - MAY 31, 2010: Figure 2A. DigitalGlobe imagery of the West Portal of the Punngye Nuclear Facility in May 2010. Published on 38 North. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - FEBRUARY 11, 2015: Figure 5A. The adjacent pad has been paved. Date: February 11, 2015 -- published on 38 North. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - JANUARY 11, 2015: Figure 4A. Pavement installed around the large domed building. Date: January 11, 2015 -- published on 38 North. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - JANUARY 11, 2015: Figure 2B. The South Tunnel Portal in deep shadow. Date: January 11, 2015 -- published on 38 North. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - JANUARY 11, 2015: Figure 1B. Construction in January at the West Portal. Date: January 11, 2015 -- published on 38 North. (Photo DigitalGlobe/38 North via Getty Images)
PUNGGYE-RI NUCLEAR TEST SITE, NORTH KOREA - JANUARY 11, 2015: Figure 3B. Little activity at the Main Support Area. Note: image rotated. Date: January 11, 2015 -- published on 38 North. (Photo DigitalGlobe/38 North via Getty Images)
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At 9:36 a.m. ET (1436 GMT) the Dow Jones industrial average was down 241.88 points, or 1.41 percent, at 16,916.78, the S&P 500 was down 27.41 points, or 1.36 percent, at 1,989.3 and the Nasdaq Composite was down 65.35 points, or 1.34 percent, at 4,826.08.

All the 10 major S&P 500 sectors were lower with the energy index's 2.54 percent fall leading the decliners. Shares of oil majors Exxon and Chevron were down over 2 percent and weighed the most on the sector.

The year was off to a shaky start after weak economic data from China reignited fears of a global economic slowdown and as the dip in oil prices show no signs of abating.

U.S. Federal Reserve Vice Chair Stanley Fischer told CNBC in an interview that levels of uncertainty had risen after events in China and North Korea.

Fischer said the Fed did not know enough at the moment to comment on how many hikes there would be in 2016 but that four hikes were "in the ballpark" in his view.

Investors will get a clearer picture into the Fed's thinking when the central bank releases minutes from its Dec. 15-16 meeting, where it raised interest rates for the first time in nearly a decade. The minutes are expected at 2 p.m. ET.

Data showed that private employers added 257,000 jobs, far ahead of the 192,000 increase expected by economists polled by Reuters. The data comes ahead of a more comprehensive non-farm payroll report on Friday.

The U.S. trade deficit narrowed in November likely as efforts by businesses to reduce an inventory overhang pushed imports of goods to their lowest level in nearly five years. The Commerce Department said the trade gap fell 5.0 percent to $42.4 billion.

Apple was down 1.6 percent at $101.07, a day after the Nikkei reported that the company is expected to cut production of its latest iPhone models due to mounting inventories.

Yahoo was down 1.2 percent at $31.78 after investor Starboard said the company should change its management, board and its business strategy.

Chipotle fell 1.6 percent to $441.90 after the company said an incident involving norovirus, would further hurt same-store sales in the fourth quarter, leading to a 14.6 percent fall.

Declining issues outnumbered advancing ones on the NYSE by 2,507 to 270. On the Nasdaq, 2,022 issues fell and 330 advanced.

The S&P 500 index showed no new 52-week highs and 24 new lows, while the Nasdaq recorded seven new highs and 59 new lows.

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