Goldman Sachs has raised its S&P 500 target to 6,500, up from 6,200, reflecting optimism following a recent agreement between the U.S. and China to lower tariffs temporarily. This adjustment suggests an expected gain of approximately 11% from the market's recent close. The easing of trade tensions is seen as a catalyst for a potential recovery in the 'Buy America' trade, which could benefit various sectors, particularly technology, as traders anticipate avoiding a U.S. recession.

Despite the positive outlook, Goldman Sachs remains cautious about the broader economic environment. The firm notes that while tariff concerns have lessened, the overall earnings outlook remains uneven, with higher tariff rates expected in 2025 compared to 2024. This could pressure profit margins for many companies. Goldman advises investors to focus on firms with strong pricing power that can sustain margins amid rising input costs.