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Wall Street dips, all eyes on British referendum

US stocks dipped in low trading volume on Wednesday, with traders focusing on Thursday's referendum on whether Britain will remain part of the European Union.

twitter-logo Reuters   New York     Last Updated: June 23, 2016  | 08:45 IST
Wall Street dips, all eyes on British referendum
Photo: Reuters

US stocks dipped in low trading volume on Wednesday, with traders focusing on Thursday's referendum on whether Britain will remain part of the European Union.

Stocks rose early after data showed US home resales rose in May to a more than nine-year high, adding to retail sales and international trade data that painted an upbeat picture of the economy in the second quarter.

But the S&P 500 once more hit a ceiling at the 2,100 level, which has been an area where sellers cluster.

Attention remained on Britain's Thursday vote. A poll published on Wednesday showed a statistical tie, with the 'Leave' camp with 45 per cent, just one point ahead of 'Remain,' and 9 per cent undecided. Oddsmakers, however, showed a clear advantage for the 'Remain' camp.

"I go with the betting odds, that's the better indicator," said Paul Zemsky, chief investment officer, Multi-Asset Strategies and Solutions at Voya Investment Management in New York.

He said despite not holding "a huge amount of risk" heading into the vote he is slightly overweight US stocks.

"Earnings revisions are up, oil prices are at a sweet spot, retail sales have been strong; once you get past this unforecastable event (the referendum), people will put cash to work in the US equity market," Zemsky said.

Investors also kept an eye on US Federal Reserve Chair Janet Yellen's second day of testimony to Congress. She repeated her speech from Tuesday, in which she played down the risk of a recession, but warned that the British vote and a US hiring slowdown posed risks to the economic outlook.

The Dow Jones industrial average .DJI fell 48.9 points, or 0.27 per cent, to 17,780.83, the S&P 500 .SPX lost 3.45 points, or 0.17 per cent, to 2,085.45 and the Nasdaq Composite dropped 10.44 points, or 0.22 per cent, to 4,833.32.

The CBOE Volatility Index closed at 21.17, its highest in four months, indicating traders are more willing to pay for protection against a decline in the S&P 500.

About 6.3 billion shares changed hands in US exchanges, compared with the 6.8 billion average over the last 20 sessions.

Tesla Motors was down 10.5 per cent at $196.66 after the Elon Musk-owned electric car maker made an offer to buy his solar installation firm SolarCity in a deal worth as much as $2.8 billion. SolarCity was up 3.3 per cent at $21.88

FedEx fell 4.5 per cent to $156.51 a day after it reported a quarterly loss.

Adobe Systems was down 5.7 per cent at $94.01 after its second-quarter revenue and full-year revenue forecast just about met analysts' estimates.

Declining issues outnumbered advancing ones on the NYSE with a 1.44-to-1 ratio and on the Nasdaq, a 1.45-to-1 ratio favored decliners.

The S&P 500 posted 26 new 52-week highs and 3 new lows; the Nasdaq recorded 55 new highs and 56 new lows.

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