U.S. equities were mixed on Tuesday as investors and traders look ahead to the “Brexit” vote on June 23 and keep a close eye on polling data. For now, the “Remain” camp looks to be maintaining slight lead. But the risk of a surprise “Leave” result, which would pressure politicians to take the United Kingdom out of the European Union, has many fearful of the economic and financial market ramifications.
The stalemate caps a three-month sideways crawl for stocks, which in turn, caps a three-year sideways crawl.
In the end, the Dow Jones Industrial Average gained 0.1%, the S&P 500 gained 0.3%, the Nasdaq Composite wafted up 0.1% and the Russell 2000 ended Tuesday 0.3% lower. Treasury bonds were little changed, the dollar was mostly stronger, gold lost 1.5% and crude oil lost 0.3%.
Energy stocks led the way higher, despite the weakness in crude oil, with refiners and exploration companies posting solid gains. The sector gained 1.1% as a group. Materials and healthcare were the laggards, down 0.3%.
United Continental Holdings Inc (NYSE:UAL) gained 3.4% after a slight (but still negative) positive revision to revenue guidance. A few transport stocks were hit, with Knight Transportation (NYSE:KNX) down 4.3% on a downgrade from analysts at Bank of America Merrill Lynch.
Back to the Brexit polls. Three of the four latest polls show Remain in the lead. NatCen shows 53% remain support vs. 47% leave support. The ORB/Telegraph poll showed 53% for remain with 46% for leave. IG/Survation poll showed remain at 46% ahead of 44% for leave. The online YouGov poll for the times showed leave beating remain at 44% to 42%.
Well-known trader George Soros warned of the dangers of Brexit in an op-ed in the Guardian, saying a leave result would cause “bigger and more disruptive” pound sterling devaluation than the 15% drop that occurred on Black Wednesday in 1992. He also highlighted the lack of awareness among voters of the political consequences of leaving.
Separately, Federal Reserve Board Chair Janet Yellen’s semi-annual testimony to Congress was a sleeper: She merely reiterated the points made at last week’s policy meeting highlighting global uncertainties and the fact the Fed is going to proceed cautiously.
If there was any significant takeaway from an uneventful session, it was the slight increase in the CBOE Volatility Index as traders bid downside protection against a surprise result on Thursday.
This boosted the VelocityShares 2x VIX (NASDAQ:TVIX) position recommended to Edge subscribers by 1.1%.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
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