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Dow Rallies 300 Points as Investors Cheer Trade Armistice

Dow Rallies 300 Points as Investors Cheer Trade Armistice

Stocks aggressively rallied on Friday as U.S. trade negotiations with China seemingly resulted in tangible progress. It's far short of a full agreement that would see the end of the various tariffs imposed since tensions ratcheted up in early 2018. The buying started early Friday after Bloomberg reported that a pact in which "China would agree to some agricultural concessions and the U.S. would provide some tariff relief" was merely awaiting the green light from President Donald Trump. In the waning minutes of the trading day, Trump announced the two countries had reached a "substantial phase one deal," though official details weren't released before the market close. Stocks sharply receded after Trump's announcement, but the Dow still finished 1.2% higher at 26,816.

If Friday's action is any indication, a large weight has been removed from the market's shoulders. While this isn't a full-blown deal, and while tariffs on hundreds of billions of dollars of goods are still in place, it still was enough to send roughly 90% of the S&P 500's components higher. The timing couldn't be better, either. The third-quarter earnings season kicks off next week with several blue chips reporting, and good news on that front could catalyze even more gains. Growth certainly seems back on the board, though investors should always protect themselves with a discerning eye. A rising tide should lift most boats, including the well-established components of the Dow -- but because it pays to be picky, check out which industrial average components Wall Street's pros trust the most. The same goes with the potential-rich but risk-heavy tech sector: See where the "smart money" is bullish with the most conviction. Indeed, it's difficult to find stocks with an ideal blend of high growth potential and high quality, but these 10 stocks across numerous sectors make the grade. Each of these companies boasts high return on equity (essentially a shorthand for quality), not to mention high growth expectations for the next three to five years.

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