Stock market in a bubble that is “likely to get bigger before it pops”

Markets were mixed on Wednesday.

The S&P 500 rose 0.6 percent but the STOXX Europe 600 fell 0.9 percent amid escalating tensions between the US and China after the US instructed China to close its consulate in Houston.

“The market feels a little more defensive than what we’ve seen,” said James Ragan, director of wealth management research at DA Davidson. “We can attribute that to the China flare up.”

Still, many analysts remain optimistic.

“A tailwind for stocks has been expectations for further stimulus from Washington and that there’s more to follow, which is warranted, given this is an election year,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman.

“There is a reasonably firm bid underneath stocks in general,” said Anik Sen, global head of equities at PineBridge Investments.

Nigam Arora wrote at MarketWatch that a new stock-market high is coming because of all the money that is being printed.

“Accept that this is a bubble, but know that this bubble is likely to get bigger before it pops,” he said.