UKX FTSE 100 Index

By Riva Gold 

U.S. stocks slipped Wednesday, as investors focused on the U.K.'s upcoming vote on membership in the European Union and oil prices fell.

Stocks, bonds and currencies around the world have recently moved in lockstep with expectations around Thursday's U.K. referendum, with risky assets like stocks and oil gaining when polls and betting firms suggest a victory for the "Remain" camp, but falling when the odds appear to favor the "Leave" campaign.

The British pound lost ground Wednesday after a poll by Opinium showed the two camps neck-and-neck, with Leave at 45% and Remain at 44%.

Energy stocks led losses in the S&P 500, falling 0.6%. U.S. crude oil fell 1.9% to $48.90 a barrel after inventory data showed that U.S. crude supplies fell less than expected last week.

The Dow Jones Industrial Average slipped 48 points, or 0.3%, to 17782. The S&P 500 fell 0.1% and the Nasdaq Composite lost 0.2%.

"Players on both sides of the Atlantic continue to hedge going into the Brexit vote," said Tom Carter, managing director at JonesTrading.

Stocks' move lower coincided with the poll and a downward fall in the price of oil that helped send energy shares lower, he said.

Shares of Tesla Motors fell 8.8% after Elon Musk proposed combining the company with solar energy firm SolarCity, of which he is also chairman and the largest shareholder. SolarCity jumped 4.4%.

The Stoxx Europe 600 rose 0.4%, following its largest three-day rally since August.

London's FTSE 100 gained 0.6%, but investors remained on edge ahead of the referendum. "Clients are more nervous than they were before," said Michelle McGrade, chief investment officer at brokerage TD Direct Investing in London. "It's sitting on your hands, waiting and seeing" ahead of the U.K. vote, she said.

Federal Reserve Chairwoman Janet Yellen said Tuesday that the U.K.'s decision "could have significant economic repercussions," as she began two days of testimony to Congress, which she continued Wednesday.

While betting markets point to a victory for the "Remain" campaign, the latest opinion polls have sent conflicting signals. Surveys released this week showed the two sides in a close race, with Survation Ltd. putting the "Remain" campaign slightly ahead and YouGov PLC giving the "Leave" camp a slim lead. More polls are expected before the results are announced, likely Friday morning.

Wall Street closed slightly higher Tuesday, but many investors were holding off on big moves ahead of the U.K. vote, analysts said.

"Everybody's focused on Thursday," said Tina Byles Williams, chief investment officer at FIS Group.

"I don't know if a 'Brexit' could derail growth -- weak as it is -- but it's the absence of robust organic growth that leads people to be so vulnerable" to the impact of political events, she said.

Nearly two thirds of investors see the breakup of the EU, including a U.K. exit, as the biggest risk to the global economy over the next year, according to a study conducted at asset manager GAM's investment conference in London last week. Still, 71% of respondents said they believe the U.K. will vote to remain.

Following a recent recovery in stock markets, strategists at UBS said Wednesday that U.K. and European equities could see a short-term percentage decline "in the midteens" but "materially smaller moves" for the S&P 500 and emerging market equities on a vote to leave.

"There is bigger downside in case of a Leave than there is upside in case of a Remain," said Manu Vandenbulck, senior portfolio manager at NN Investment Partners in Belgium. Still, he said, longer-term losses for Europe may be limited, as the European Central Bank remains supportive, while equity valuations in the region are attractive and investors are sitting on a large amount of cash.

Gold, which tends to gain in times of market stress, pulled back 0.1% to $1,271 an ounce.

The euro edged up 0.5% against the dollar to $1.1312, while the British pound fell slightly against the dollar to $1.4664.

"Most investors believe that the greatest short-term impact -- of fear of Brexit rather than Brexit itself -- will be on sterling," said Townsend Lansing, executive director at ETF Securities, in a note. As investors hedged their bets, inflows into ETF Securities' short-sterling exchange-traded funds have reached a record high this year, at nearly twice the amount before the Scottish Referendum in 2014.

Earlier, Asian markets were mixed in light trade, with stocks in Japan declining 0.6%, and the Shanghai Composite Index adding 0.9%.

--Alex Bitter contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

June 22, 2016 14:06 ET (18:06 GMT)

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