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Apple, Intel Dive On Dow As Trump Tariffs Take Down Stock Market

Key stock indexes sold off Thursday after President Trump announced he would sign a measure next week imposing tariffs on steel and aluminum imports. About half the Dow stocks, including Apple, were down 2% or more.

X  SPDR Dow Jones Industrial Average (DIA) dived 2%, PowerShares QQQ Trust (QQQ) tumbled 1.4% and SPDR S&P 500 (SPY) gave up 1.3% in the stock market today. Emerging markets fared better as iShares MSCI Emerging Markets (EEM) inched up 0.1%.

Industrial, financial and technology led the downside among sector funds. SPDR Financial (XLF) lost 1.4% and fell below its 50-day moving average in its third straight decline. VanEck Vectors Semiconductor (SMH) also dropped 1.4% but remains slightly above its 50-day line. SPDR Technology (XLK), down 1.5%, traced a similar pattern.

Dow component Apple reversed from a near 1% gain to a 1.5% loss. Shares hit new intraday highs the previous two sessions and have been trying to stay above the 180 level this week. The iPhone maker took 87% of smartphone industry profits in Q4, Cannacord estimated in a report Wednesday.

Other big blue chip losers included Boeing (BA), Caterpillar (CAT), Intel (INTC) and United Technologies (UTX), which all suffered losses of 2% or more.

Golden Opportunity?

Is it time to buy gold? A pair of gold funds have been testing their 50-day moving average — and a solid rebound off the line could set up a buy opportunity. But Thursday morning, they gapped down below the support line, so keep watching to see if they can rebound back above it.

SPDR Gold Shares (GLD) closed at its 50-day line Tuesday and Wednesday. The ETF gained 7% after recovering the support line in December to its Jan. 25 intraday high. The $35.4 billion fund, which tracks the price of gold bullion, marked its 13th year in November.

Smaller peer iShares Gold Trust (IAU), with $11.3 billion in assets, is also testing the 50-day line as it traces a similar pattern. It advanced 7% during the same period from December to its late-January peak. IAU is slightly younger — it turned 13 in January.

GLD is up 1.2% and IAU up 1.1% year-to-date as of Feb. 27, according to Morningstar Direct, trailing the S&P 500's 3% gain. Longer-term average annual returns for both funds have lagged the benchmark S&P index — not surprising, given that the current equity bull market is in its ninth year.

Gold, which has held above the $1,300 level this year, has long been considered a safe-haven defensive play. So gold prices often go up when stocks go down and risks are perceived as being high. The precious metal is also sensitive to inflation and interest rates. Fed Chairman Jerome Powell on Tuesday spooked the stock market when his favorable view of the economy caused investors to believe the Fed will raise rates more than widely expected.

Even so, gold can continue to rise, according to CFRA Research. That's because despite its price appreciation last year, gold's relative valuation is still cheaper than stocks, CFRA investment strategist Lindsey Bell wrote in a recent note.


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"In summary, as CFRA looks to the remainder of the year, we think interest rates will increase at a moderate pace, the dollar will remain weak, and inflation will be contained," she said. "We see gold as a smart and defensive way to diversify a portfolio in the later innings of a bull market and ahead of what has historically been a volatile year as midterm elections approach. Geopolitical tensions with North Korea remain, and while gridlock in Washington has abated for now, we view immigration and infrastructure spending as topics that could quickly drive its return."

Wednesday's pick, iShares MSCI Emerging Markets (EEM), slipped below its 50-day line as stocks sold off. Keep an eye on it to see if it can regain the line and make a strong move.

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