US stocks plunge as investors see no safety in bonds

Markets were mostly down on Wednesday.

The S&P 500 plunged 3.3 percent, falling for the fifth consecutive day, its longest losing streak since November 2016.

Elsewhere, the STOXX Europe 600 tumbled 1.6 percent but the Nikkei 225 rose 0.2 percent.

Despite the sharp fall in US stocks, some analysts remain sanguine.

Brad McMillan, chief investment officer at Commonwealth Financial Network, described the market’s decline as “normal volatility” and said stocks were “past due for a pullback”.

Terry Sandven, chief equity strategist at US Bank Wealth Management, said that “U.S. equity markets are becoming oversold and due for a rebound”.

However, other analysts noted that the sharp sell-off in stocks occurred even as investors have been selling US Treasuries, typically seen as a safe-haven.

“There's no flight to safety in bonds. That's a sea change,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Art Hogan, chief market strategist at B. Riley FBR, suggested that the “best way to be defensive now is to raise cash”.

Technical analysts also see worrisome signs.

“The selling is a result of selling the best performing stocks this year and it is difficult to time when that selling pressure will slow,” said JC O'Hara, chief market technician at MKM Partners.

“What's concerning is that we saw the index break below its January high with narrowing breadth and not getting a confirmation of the most recent high by several momentum gauges,” said Andrew Thrasher, portfolio manager at The Financial Enhancement Group and founder of Thrasher Analytics.