Stocks Close Modestly Lower Ahead Of Brexit Vote - U.S. Commentary

(RTTNews) - After moving moderately higher early in the session, stocks turned lower over the course of the trading day on Wednesday. Selling pressure remained relatively subdued, however, limiting the downside for the markets.

The major averages eventually ended the day modestly below the unchanged line. The Dow fell 48.90 points or 0.3 percent to 17,780.83, the Nasdaq dipped 10.44 points or 0.2 percent to 4,833.32 and the S&P 500 edged down 3.45 points or 0.2 percent to 2,085.45.

The downturn by the markets came as traders expressed trepidation ahead of tomorrow's referendum on whether Britain will remain in the European Union.

Recent polls have shown voters divided on the so-called Brexit, suggesting the referendum could still go either way despite recent optimism about the outcome.

In testimony to the Senate Banking Committee on Tuesday, Federal Reserve Chair Janet Yellen warned the Brexit could have "significant economic repercussions."

Yellen returned to Capitol Hill this morning to deliver her semi-annual testimony before the House Financial Services Committee.

The Fed Chief reiterated that the central bank will take a cautious approach to raising interest rates at upcoming meetings.

On the U.S. economic front, the National Association of Realtors released a report showing that existing home sales rose to their highest level in over nine years in May.

NAR said existing home sales rose by 1.8 percent to an annual rate of 5.53 million in May from a downwardly revised 5.43 million in April.

Economists had expected existing home sales to climb 2.2 percent to a rate of 5.57 million from the 5.45 million originally reported for the previous month.

While existing home sales increased by slightly less than expected, the rate of sales in May was the highest since reaching 5.79 million in February of 2007.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the relatively lackluster close by the broader markets.

Electronic storage stocks showed a substantial move to the downside, however, with the NYSE Arca Disk Drive Index slumping by 4 percent. The pullback by the index came after it ended the previous session at a six-month closing high.

Violin Memory (VMEM) and Imation (IMN) turned in two of the storage sector's worst performances, tumbling by 12.9 percent and 7.8 percent, respectively.

On the other hand, gold stocks moved notably higher as the day progressed, resulting in a 3.2 percent jump by the NYSE Arca Gold Bugs Index.

The strength among gold stocks came despite a decrease by the price of the precious metal, as gold for August delivery fell $2.50 to $1,270 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dropped by 0.6 percent, while Hong Kong's Hang Seng Index advanced by 0.6 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index rose by 0.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index both climbed by 0.6 percent.

In the bond market, treasuries moved modestly higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to 1.685 percent.

Looking Ahead

Traders are likely to focus on the latest news regarding the Brexit vote on Thursday, which may overshadow U.S. reports on weekly jobless claims, new home sales, and leading economic indicators.