Goldman Sachs Group Inc. lifted its US stock targets, as the easing of trade tensions between the US and China fuels a comeback of the “Buy America” trade.

Strategists including David Kostin now see the S&P 500 Index reaching 6,500 in the next 12 months, up from 6,200 previously. The new estimate implies about a gain of about 11% from Monday’s close.

The upgrade follows Monday’s rally on Wall Street after negotiators from the world’s two largest economies agreed to temporarily lower tariffs, with traders betting that a US recession can be avoided. Goldman remains somewhat cautious, however.

“Already-optimistic market pricing of the economic growth outlook as well as uncertainty surrounding the magnitude of impending slowdown in economic and earnings growth will likely keep a ceiling on equity multiples during the next few months,” the strategists wrote in a note.

Goldman had cut its S&P 500 forecasts twice in March, citing higher recession risk and tariff-related uncertainty. The strategists said that while such concerns have eased with the latest agreement, and Big Tech stocks should especially recover, the broader earnings outlook is uneven.

“Despite the recent improvement in the growth outlook, tariff rates will likely be substantially higher in 2025 than they were in 2024, putting pressure on profit margins,” they wrote. Goldman recommends investors focus on shares of companies with high pricing power that can maintain margins in the face of elevated input costs.