The S&P 500 ^GSPC is going to perform better than analysts at JPMorgan expected, the firm said in a Monday note, setting a 3,200 price target for the index.
The new price target represents 6.2% upside from the S&P's Friday close. JPMorgan previously had a view of 3,000 for the second half.
Some of the catalysts leading to the improved outlook include the Federal Reserve's pivot to more interventionist monetary policy and the cooling of trade tensions between the U.S. and China.
The key to the upgrade is also the firm's belief that central banks worldwide will follow the Fed's lead and ease monetary policy in the second half.
Despite a more bullish view on China-U.S. trade tensions, JPMorgan warns investors against trade-sensitive stocks.
"The more cyclical and trade-sensitive stocks will likely see a higher degree of negative revisions to forward guidance," the note said. "However, these stocks are not that vulnerable given most trade at a significant discount to the market with some pricing in a recession."