U.S. stocks closed lower Wednesday, weighed by declines in energy stocks, as investors remained on edge ahead of the U.K. vote on whether to leave the European Union.
Shares of McDonald's closed more than 1.5 percent lower for the greatest negative impact on the Dow Jones industrial average as most constituents declined. Nomura downgraded the stock
to "neutral" from "buy" on expectations of weaker sales. The blue-chips index traded near the flatline in midday trade.
Energy closed more than half a percent lower to lead S&P 500 sectors lower, with oil settling below $50 a barrel.
The major indexes came off session highs in afternoon trade as the pound briefly erased earlier gains against the U.S. dollar.
A poll released Wednesday from TNS indicated support for "leave" holding over "remain," Reuters reported. Pound sterling struggled to hold gains against the U.S. dollar and was last near $1.470 after on Tuesday touching its highest against the greenback since early January.
"I expect the news to change and the story to change 10 more times between today and tomorrow," said John Caruso, senior market strategist at RJO Futures.
The EU referendum is scheduled for Thursday and the results are not expected until after the U.S. market close that day.
"Obviously the market's tentative ahead of the whole Brexit thing," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
The iShares Nasdaq Biotechnology ETF (IBB) reversed earlier losses to close about two-thirds of a percent higher. Health care closed well off session highs but remained the top S&P performer.
Analysts generally attributed the biotech gains to a U.S. Treasury press release that did not mention the trigger of the Independent Payment Advisory Board, whose role would be limiting Medicare spending. Concerns of a catalyst to creating the board weighed on biotech stocks Tuesday.
Tesla closed nearly 10.5 percent lower for the greatest negative impact on the Nasdaq 100. Late Tuesday, Elon Musk's electric car manufacturer proposed to buy SolarCity for about $2.8 billion. Musk CEO of Tesla and the controlling shareholder of the solar company, whose shares gained more than 3 percent Wednesday.
U.S. crude oil futures for August delivery settled down 72 cents, or 1.44 percent, at $49.13 a barrel, off session lows. On a continuous basis, oil gained 0.57 percent from Tuesday's settle of $48.85 on the July contract, which then rolled to August.
WTI came off highs to briefly trade more than 2.5 percent lower after the EIA said U.S. crude oil stocks declined a smaller-than-expected 917,000 barrels.