Wall Street edges up ahead of Brexit vote

By Tanya Agrawal

(Reuters) - U.S. stocks opened slightly higher on Wednesday as investors held off from making big bets, a day ahead of Britain's referendum on its European Union membership.

Traders are guardedly optimistic about a "Remain" vote. While polls are extremely close, bookmakers have pointed to betting patterns in favor of the U.K. remaining in the EU.

Investors will also keep an eye on U.S. Federal Reserve Chair Janet Yellen's second day of testimony to Congress on the health of the economy.

On Tuesday, Yellen was optimistic about the economy and played down the risk of a recession, but warned that the British vote on Thursday and a U.S. hiring slowdown posed risks to the economic outlook.

Yellen's comments pointed to a cautious central bank, virtually ruling out a July rate hike. The Fed also warned U.S. stock market valuations are "well above" their median over the past 30 years, the strongest such assessment in years.

The S&P 500 is trading at about 16.5 times expected earnings, above the 30-year median of 14.6 times, according to Thomson Reuters Datastream.

Trading is expected to be light with investors adopting a wait-and-watch approach.

"Most investors are in the mood to take some profits off the table and this could impact the volume in the market as we march towards the final hours of the referendum campaign," said Naeem Aslam, chief market analyst at Think Forex UK, in a note.

Fed Governor Jerome Powell said the central bank was "ready for whatever happens" in Britain's close-to-call vote.

At 9:36 a.m. ET (1336 GMT), the Dow Jones industrial average was up 31.91 points, or 0.18 percent, at 17,861.64, the S&P 500 was up 3.01 points, or 0.14 percent, at 2,091.91 and the Nasdaq Composite was up 2.62 points, or 0.05 percent, at 4,846.38.

Nine of the 10 major S&P sectors were higher, with the telecommunications index's 0.42 percent rise leading the advancers.

Data on Wednesday includes U.S. home resales at 10 a.m. ET. A Reuters survey of economists forecast a 1.1 percent rise in existing home sales to an annual rate of 5.54 million units last month, following a 1.7 percent gain in April.

Oil rose above $50 a barrel after an industry report showed a large drop in U.S. crude inventories, with analysts expecting volatile trading ahead of the British referendum.

Tesla Motors was down 8.7 percent at $200.80 after the Elon Musk-owned electric car maker made an offer to buy his solar installation firm SolarCity in a stock deal worth as much as $2.8 billion. SolarCity was up 8.7 percent at $23.12.

Adobe Systems was down 4.2 percent at $95.52 after its second-quarter revenue and full-year revenue forecast just about met analysts' estimates.

Advancing issues outnumbered decliners on the NYSE by 1,526 to 1,033. On the Nasdaq, 1,155 issues rose and 942 fell.

The S&P 500 index showed 13 new 52-week highs and one new low, while the Nasdaq recorded 13 new highs and 11 new lows.

(Reporting by Tanya Agrawal in Bangalore; Editing by Don Sebastian)