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Looming Brexit vote to keep traders on edge

Angst ahead of the U.K. vote on whether to leave the EU will likely keep stocks hanging in suspense Wednesday.

"I think the U.S. market and international markets could trade up if it looks like they're going to stay. ... If we don't see anything significant, I think the market trades sideways ahead of that vote," said Kevin Mahn, chief investment officer at Hennion & Walsh.

U.S. stocks closed higher Tuesday as a renewed sense that a remain vote would prevail continued for a second straight day. However, equities again ended off highs amid U.S. Federal Reserve Chair Janet Yellen's two-day congressional testimony and a fresh Brexit poll that indicated leave recovered some momentum.

"Honestly, all these polls are dizzying," said Peter Boockvar, chief market analyst at The Lindsey Group.

"I think the market just wants to get this vote over at this point," he said, noting stocks will probably breathe an initial sigh of relief after the vote while questions around global growth challenges remain.

The result of the EU referendum isn't expected until U.S. markets open on Friday. Anxiety ahead of that time and any fresh polls will likely keep traders on edge for the next two days.

"How much of 'Great Britain going to remain in the EU,' how much of that is already priced in, that's kind of the question right now," said John Caruso, senior market strategist at RJO Futures.

In the United States, data due for release Wednesday include May existing home sales and the April FHFA home price index. The existing home sales are expected to rise 1.1 percent to a 5.54 million seasonally adjusted annual rate, according to analysts polled by Reuters.

Oil inventory data from the U.S. Energy Information Administration is also due in the morning and will be watched for signs on declines in supply and production. Data from the American Petroleum Institute showed a bigger-than-expected drawdown in inventory, Reuters said. WTI futures, which rolled to August after Tuesday's settle, reversed earlier losses in post-settlement trade. Futures for July delivery settled down 1.05 percent at $48.85 a barrel. Futures for August delivery settled 0.22 percent lower at $49.95 a barrel.

TD Ameritrade Chief Strategist JJ Kinahan said the late-day recovery in oil prices to settle off session lows helped stocks hold gains in the close. The energy sector led advancers as the S&P 500 closed up more than five points at 2,088.90.

Stocks briefly turned lower but mostly held their opening gains amid Yellen's testimony before the Senate Banking Committee on Tuesday, which analysts said did not offer anything new after her press conference last week.

She is set to testify again Wednesday morning before the House Financial Services Committee. Yellen did note Tuesday that Brexit could have significant economic repercussions.

"I expect the anxiety to increase so the market will continue to react and there could be a fair amount of volatility. Intraday volatility is going to be the norm tomorrow," said Bryce Doty, senior portfolio manager at Sit Fixed Income Advisors. He was speaking of both stocks and Treasurys.

In earnings news, FedEx reported a quarterly loss for its fiscal fourth quarter ending May 31 of $70 million, or 26 cents per share, an improvement over the loss of $895 million (or $3.16 per share) it posted a year earlier, Reuters said. The package delivery company, seen by many as a proxy on U.S. consumer activity, cited negative impact from pension adjustments and acquisition-related expenses, according to the news wire.

"It was a loss and a little bit bigger loss than maybe some had expected," Kinahan said.

"We keep hearing the consumer is coming back, yet at the end of the day [it's] still not what we want to see of consumers," he said, noting that if stocks decline Wednesday, FedEx will likely be a contributing factor. "But at the end of the day, Brexit and Brexit rumors still rule."

Excluding charges, FedEx posted quarterly net income of $879 million, or $3.30 per share, Reuters said. Charges for pensions totaled $3.47 per share, while TNT-acquisition-related charges amounted to 34 cents per share.

Companies due to report before the bell Wednesday include Actuant, H & M Hennes & Mauritz and Winnebago. Bed Bath & Beyond, Red Hat and Barnes & Noble are among those scheduled to report after the close.