US open: Stocks edge higher ahead of UK referendum

US stocks edged higher in cautious trade on Wednesday, a day before Britain’s referendum on EU membership.

At 1545 BST, the Dow Jones Industrial Average, the Nasdaq and the S&P 500 were all 0.4% firmer.

At the same time, oil prices slipped into the red after data from the Energy Information Administration showed US crude inventories fell by 900,000 barrels last week, which was a smaller drop than expected.

West Texas Intermediate was down 0.3% to $49.68 a barrel and Brent crude was off 0.4% at $50.42.

Joshua Mahony, market analyst at IG, said: “With less than 24 hours left until the UK hits the polling booth, there is a tangible feeling of uncertainty and anxiety permeating through financial markets this morning, with the bullish sentiment that started the week is short supply. We have a whole host of economic data points between now and Friday, yet the fact of the matter is that there is unlikely to be much which will avert the gaze of the trading community from the very real possibility of a Brexit.

“With betting markets and the IG binary (78% remain) all pointing towards a substantially higher likeliness of a ‘remain’ vote tomorrow, it is also likely that the wider markets also reflect this same bias. As such, while this vote is a binary one (yes or no), the market repercussions are likely to be substantially larger should the UK leave the EU.”

Aside from the issue of Brexit, investors were digesting more comments from Yellen as she delivered the second part of her two-day testimony before Congress after she reiterated a cautious approach to hiking interest rates on Tuesday.

Yellen said on Tuesday that she sees “considerable uncertainty” over the US economic outlook, also highlighting the potential impact of the UK referendum.

“In the current environment of sluggish growth, low inflation, and already very accommodative monetary policy in many advanced economies, investor perceptions of and appetite for risk can change abruptly,” Yellen said. “One development that could shift investor sentiment is the upcoming referendum in the United Kingdom. A UK vote to exit the European Union could have significant economic repercussions.”

On the corporate front, Tesla Motors slumped nearly 9% after the electric car maker made an offer for SolarCity Corp. Shares in the latter surged.

Shares in motor homes manufacturer Winnebago Industries gained after its third-quarter profit came in better than expected.

Data out earlier from the National Association of Realtors showed sales of existing US homes rose to a nine-year high in May.

Sales were up 1.8% to a seasonally-adjusted annual rate of 5.53m from a downwardly revised 5.43m in April. This was a touch weaker than economists had expected.

Sales were up 4.5% from May 2015, at their highest annual pace since February 2007. Meanwhile, the median price for a home rose 4.7% from last May to $239,700.