Goldman Sachs analysts now predict that the S&P 500 will contract by a smaller percentage than they predicted in a note last month.
The firm says the S&P 500 will see a downside to 2,750, with a rally to 3,200 a possibility. The S&P closed Friday at a record 3,044.
"The powerful rebound means our previous three-month target of 2,400 is unlikely to be realized. Monetary- and fiscal-policy support limit likely downside to roughly 10%," said Goldman analyst David Kostin.
Three weeks ago, Goldman Sachs warned that the S&P 500 could contract 18% following a closing level of 2,929, as there was little room for growth in their full-year model of 3,000.
Kostin wrote that while New York seems to have been able to flatten the coronavirus curve, "new infections in the rest of the U.S. are increasing. Cases of infection may accelerate as states begin to relax shelter-in-place rules."
And while the firm is now less bearish on the S&P 500, Goldman Sachs still says the short-term outlook for the wide-ranging index is "neutral at best."
This report comes after JPMorgan analysts in a May 28 note reduced their take on the index due to increasing U.S.-China trade tensions.
"A complete breakdown of supply chains and international trade, primarily between the two largest economies (US and China), would justify equities trading drastically lower," JPMorgan said in a note, according to CNBC.
The S&P 500 was at last check rising 0.5% to 3,059. Other market benchmarks were higher as well, with the Dow industrials up 0.4% and the Nasdaq Composite up 0.82%.