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US stocks slip after polls suggest UK Brexit sentiment in the lead

Last updated: 06:54 23 Jun 2016 AEST, First published: 01:54 23 Jun 2016 AEST

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US stocks slipped by the close on Wednesday, as two opinion polls gave the Leave camp a slight lead ahead of the UK referendum on European Union relations taking place on Thursday, while oil prices sagged.

The market bellwether S&P 500 index closed down 0.2% at 2,085 and the Vix index, a measure of implied S&P 500 volatility over the next month, soared by more than 14% to 21.17. That’s above its long-term average of 20.0.

The S&P Midcap 400 shed 0.2% as well, taking it down to 1,491, while the S&P Smallcap 600 lost 0.5% to 705.

The wider small-cap ticker Russell 2000 was down 0.4% at 1,148.

Contributing to the downside, the US oil benchmark, the West Texas Intermediate, lost 1.1% to $48.85 despite weekly oil inventories suggesting a fifth successive week of stockpile contraction.


Midsession

US stocks were flat-to-lower at midsession on Wednesday after oil prices sagged and jitters grew over what a Brexit by the UK might deliver.

Even US existing home sales rising to their highest since the 2007 credit crunch or a fifth successive week of declines in oil inventories from the Energy Department’s databank, were able to muster a rally from the bourse.

The market bellwether S&P 500 index was up 0.1% at 2,091, with Newfield Exploration Co (NYSE:NFX) the top riser of 5% to $42.93.

The S&P Midcap 400 was less fortunate, falling 0.05% to 1,493, with Adv Micro Devices (NYSE:AMD) the main faller of 7.3% to $5.05, while the S&P Smallcap 600 shed 0.3% to 705, with Emergent BioSolutions(NYSE:EBS) the main loser of 20.6% to $31.21.

The US oil benchmark West Texas Intermediate was down 2.5% at $48.61

With the polls neck-and-neck on the last day of campaigning ahead of polling on June 23, the European Commission President Jean-Claude Juncker offered a hardline and frank assessment of any victory for the Leave camp: “Out is out,” he said.

Such a vote would be final and not trigger any further renegotiation over the UK’s place in the European Union.

In language which seemed to defy a process of people power, Juncker in an interview with Germany’s Frankfurter Allgemeine Zeitung said he was “basically not a big fan of referendums”.

US investors were also counting what the cost could be of any vote to quit the EU. Britain’s benchmark FTSE 100 index could fall to its lowest point since 2011, slipping below the 5000 mark if the country votes to leave the EU, according to UBS.

That would undoubtedly have a knock-on effect on US market trading.

One of the sharpest fallers was Adobe Systems Inc (NASDAQ:ADBE). After hours on Tuesday it presented a downbeat trading outlook. Adobe stock was down 5.5% at $94.32.


Open

Ahead of the historic EU referendum vote in the UK tomorrow, Wall Street shares climbed higher midweek.

The S&P 500 was up just under 4 points at 2,092 and the Dow Jones industrial average was around 50 points higher at 17,879.
 
On the Dow Jones, McDonald's corp was the surprise big loser, down 1.5% to US$120 a share.
 
Fed chair Janet Yellen later today gives her semi-annual monetary policy report to Congress after yesterday testifying on banking, housing and urban affairs. 
 
On NASDAQ, Tesla (NASDAQ:TSLA) founder Elon Musk failed to ease investors as shares in the electric car company tanked almost 10% after revealing he plans to buy out his own SolarCity.
 
Solar City (NASDAQ:SCTY) shares climbed higher on the news however, reaching US$23, up 9%.

Preview

 
Wall Street shares are seen higher midweek after stocks solidified gains on Tuesday and ahead of the historic UK referendum tomorrow on whether to stay in or leave the EU.
 
The benchmark Dow closed 24 higher at 17,829 yesterday, while the S&P500 added 5.65 at 2,088 and the tech heavy Nasdaq exchange was flat at 4,843.
 
Today Dow futures are 24 higher, the Nasdaq is up 9.25 and the S&P500 is 2.75 ahead.
 
Traders will be looking out for any comments on monetary policy clues later, as Janet Yellen continues her policy report to Congress.
 
In focus globally is the vote on Thursday by the UK on whether to brexit (leave the EU) or not and apparently, the result may well be too close to call, but investors appear in fairly upbeat mood, with Footsie up over 37 points at the time of writing at 6,264.
 
On the US corporate front today, it's a relatively slow day for corporate results. Barnes & Noble (NYSE: BKS) and Bed Bath & Beyond (NYSE: BBBY) are two firms reporting quarterly earnings after the bell.
 
The big story is from electric vehicle superfirm Tesla (NASDAQ:TSLA), whose shares crashed over 11% in pre-market, as it emerged Elon Musk's Tesla had made an offer for his  solar panel specialist SolarCity Corp (NASDAQ: SCTY)in a stock deal worth as much as US$2.8 billion.
 
Shares of SolarCity, however, beamed around 18% higher to US$25.02 each.

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