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Goldman Sachs (GS, Financials) raised its short- and long-term S&P 500 forecasts Tuesday after the U.S. and China agreed to lower tariffs on each other's imports for a 90-day period.
The bank now expects the S&P 500 to rise 1% over the next three months to about 5,900, up from its earlier projection of 5,700. Over the next 12 months, Goldman forecasts 11% growth, targeting 6,500 compared to its previous 6,200 estimate.
Goldman attributed the revised outlook to lower tariff rates, better economic growth, and less recession risk. The U.S. administration is cutting tariffs on Chinese goods to 30% from 145%, while China will reduce its tariffs on American imports to 10% from 125%.
The S&P 500 rose 0.8% in recent trading and is up 4% this week, as investors react to signs of easing geopolitical tensions.
Goldman's more bullish stance reflects broader optimism that a pause in trade hostilities could support global corporate earnings and sustain market momentum.
Investors should monitor developments ahead of the 90-day deadline and upcoming economic data for any shifts in sentiment.
This article first appeared on GuruFocus.