Two weeks ago the polls showed a modest 4 percent leaning toward Britain leaving the EU.  After last week's assassination of Jo Cox, the gap started quickly closing until yesterday it was even-steven, with an impressive 9% undecided and presumed to be potential "Remain" votes.  This morning as Brits marched to the polls (in the midst of torrential rains), the surveys showed that half of that 9% was indeed now going anti-Brexit.  This shot the market up a very big 230 points as everyone was anxiously awaiting a big sigh of relief to learn that the global markets were likely not going to be turned upside down after all.  So much was this taken as a given that the VIX had a one-day decline of a whopping 18 percent.

But lo and behold, the late night news has brought sad tidings for U.S. 401K's as the news from across the pond is that Britain will indeed be leaving the EU.  It was such a close contest that, as late as 10:30 p.m., they were projecting a thin 1% "Remain" victory.  However at 12:20 a.m. (about 15 minutes ago as I write this), with a 3% margin and 4/5 of all areas counted, the "Leaves" have it. It's a fair bet now that there will be a tremendous amount of short selling first thing in the morning followed by a very likely triple-digit drop in Friday's Dow, and indeed in markets all over the world.  Only time will tell if this will plunge Europe into another recession or if someone will find a way to temper the impact.  Thursday's volume was close to recent averages with 6.4 billion shares traded.

Markets | Thu Jun 23, 2016 4:33pm EDT

Wall St. bets on Britain staying in EU; stocks rally

BY RODRIGO CAMPOS

DJ: 18,011.07  +230.24           NAS: 4,910.04  +76.72       S&P: 2,113.32  +27.87

REUTERS/BRENDAN MCDERMID

U.S. stocks rallied on Thursday, led by bank shares, as Wall Street bet strongly that Britain is voting to remain part of the European Union, potentially avoiding a hit to European trade and its consequences to global economic growth.  There are no exit polls for the referendum, for which polls close at 5 p.m. EDT. Although bookmakers give the remain camp a more than 80-percent chance of victory, recent polls continued to show the decision as too close to call.

The British pound rallied against the U.S. dollar GBP=, brushing $1.50 to hit its highest since late December. It was recently up 1.22 percent at $1.4882.

"People are expecting that Britain is going to vote to stay in the EU based on what's happening here, particularly with the fact that financials are leading," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"They view the potential disruption of a British exit as a major financial event. The relief rally, makes sense, would be strongest among those names."

The Dow Jones industrial average .DJI rose 230.24 points, or 1.29 percent, to 18,011.07, the S&P 500 .SPX gained 27.87 points, or 1.34 percent, to 2,113.32 and the Nasdaq Composite.IXIC added 76.72 points, or 1.59 percent, to 4,910.04.  The Dow industrials closed back above 18,000 and at its highest since April 27. The financial sector led the S&P 500 with a 2.1 percent gain.

The CBOE Volatility index .VIX fell 18.5 percent, its largest daily percentage decline since October 2013.

Earlier, U.S. jobless claims and factory data pointed to a strengthening economy.  Given the improving economic backdrop, the S&P 500 could hit a record high in the next few days if Britons decide to stay in the EU, Jankovskis said.

"People generally view that as a positive for emerging markets, crude oil, so this suggests this is a rally that would have some legs," he said.

The S&P 500 closed 0.8 percent below its record closing high hit May last year.

Software maker Twilio Inc (TWLO.N) nearly doubled in its market debut, rising as high as $29.60 after pricing at $15. It closed up 91.9 percent at $28.79.

Micron Technology (MU.O) added 10.5 percent at $14.05 in more than three times the average daily volume of the past 10 days.

About 6.4 billion shares changed hands in U.S. exchanges, below the 6.8 billion average over the past 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 4.98-to-1 and on the Nasdaq, a 3.57-to-1 ratio favored advancers.

The S&P 500 posted 52 new 52-week highs and 2 new lows; the Nasdaq recorded 88 new highs and 26 new lows.