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Trade Pendulum Swings Back in Wall Street's Favor

Trade Pendulum Swings Back in Wall Street's Favor

International forces did most of the heavy pushing and pulling on U.S. stocks Tuesday. The market initially seemed poised for a difficult session amid news that Boris Johnson was elected as Britain's prime minister -- only to be greeted by European Union rejection of his "Brexit" plan minutes later. Further weighing on sentiment was an EU statement that it was ready to retaliate against U.S. trade threats with its own tariffs on $39 billion worth of U.S. goods. But the trade winds swung America's way by the afternoon, as Bloomberg reported that U.S. Trade Representative Robert Lighthizer and other officials plan to visit China on July 29 for high-level talks. That breakthrough gave markets a jolt, helping the Dow to finish 0.7% higher to 27,349.

It's an all-too-familiar thread of hope for investors: that well more than a year of tariffs and trade posturing will finally come to an end. They're also plenty familiar with the chances of disappointment in this arena, so just be prepared for either outcome. Know which stocks will feast or fall on China trade, and know how to "China-proof" your portfolio should talks break down again. But the upside potential is clear: A tariff truce could re-energize both countries' economies and stock markets. Where can you find upside? Consider this who's-who list of China's most exciting tech companies. A growth spark would be great for domestic and international industrial stocks, too. And when in doubt, overload on quality.

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