Investing.com – Wall Street traded higher on Wednesday, heading for a three-day rally as markets prepared for the U.K.’s historic referendum the following day which Federal Reserve (Fed) chair Janet Yellen again identified as having possible economic repercussions, while oil turned to losses after weekly inventory data.
At 15:45GMT or 11:45AM ET, the Dow 30 rose 22 points, or 0.12%, the S&P 500 traded up 6 points, or 0.27%, while the tech-heavy NASDAQ Composite advanced 22 points, or 0.46%.
Though the recent rally in sterling this week, trading near Monday’s six-month highs of 1.4782 against the dollar, suggested that markets were betting that the Remain camp would claim victory over a Brexit, as the vote to leave the EU is known, in Thursday’s U.K. referendum on its membership in the European Union (EU).
Still, recent polls had situated both camps in a neck and neck race that many experts considered too close to call.
U.S. financial markets were watching developments closely with concern over the impact if a Brexit came to pass.
Both Credit Suisse (SIX:CSGN) and UBS warned in notes released Wednesday that a vote by the U.K. to leave, while having a more dire effect on London’s FTSE 100, could also drive the S&P 500 down by 7.5% or 9%, respectively.
Meanwhile, Yellen repeated her semi-annual testimony given on Tuesday to the Senate for the benefit of the House Committee on Financial Services.
As in the prior day’s remarks, Yellen repeated that there was uncertainty surrounding the economic outlook but the Fed anticipated a gradual increase in rate hikes.
She also fingered the rebalancing of China’s economy and Thursday’s U.K. referendum as the major external risks.
With that in mind, attention would focus on Yellen’s June 29 appearance at the European Central Bank’s conference to see how her views on monetary policy might change after the British people make their decision on whether they will remain or leave the EU.
Among other Fed officials speaking on Wednesday, Fed governor Jerome Powell insisted that U.S. central bank was “ready for whatever happens” in Thursday’s vote, while Fed vice-president Stanley Fischer focused only on the progress on “too-big-to-fail” regulation.
On the economic front, May existing home sales rose to a more-than-nine-year high, settling in line with consensus.
Also showing strength in the housing market, the April housing price index rose slightly to 233.8.
In crude markets, West Texas Intermediate oil futures turned lower in North America trade on Wednesday, reversing overnight gains after data showed that oil supplies in the U.S. fell much less than expected last week.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 0.9 million barrels in the week ended June 17. Market analysts' expected a crude-stock decline of 1.7 million barrels, while the American Petroleum Institute late Tuesday reported a supply drop of 5.2 million barrels
U.S. crude futures fell 1.52% to $49.09 a barrel by 15:47GMT or 11:47AM ET, while Brent oil lost 1.60% to $49.81.
In company news, SolarCity (NASDAQ:SCTY) shares spiked more than 8%, while Tesla (NASDAQ:TSLA) shares dropped more than 7% after saying it would bid $2.8 billion to buy the solar energy company. SolarCity's controlling shareholder, Elon Musk, is also the CEO of electric car company Tesla.
McDonald’s Corporation (NYSE:MCD) dropped almost 2% despite a report that the global fast-food giant had more than a dozen bidders for the sale of stores in China and Hong Kong.
Adobe Systems (NASDAQ:ADBE) lost almost 5% after the cloud and software maker provided guidance that fell short of market expectations, despite reporting better-than-expected quarterly earnings after Tuesday’s closing bell.
FedEx (NYSE:FDX), considered a bellwether for the global economy, slumped more than 4% after the package delivery company reported a quarterly loss due pension accounting adjustments and acquisition costs related to TNT.
In the positive, Winnebago Industries Inc (NYSE:WGO) gained more than 4% after the recreational vehicle maker released better-than-expected earnings.
Red Hat Inc (NYSE:RHT), Barnes & Noble (NYSE:BKS) and Apogee Enterprises Inc (NASDAQ:APOG) were among companies scheduled to report earnings after the close.