Despite factoring in an expectation for lower corporate profits, Goldman Sachs Chief U.S. Portfolio Strategist Abby Joseph Cohen expects the S&P 500 to rise to 1550 by the end of the year from its current 1436.
“Our feeling is that most of what’s happened in the last two months or so has affected the markets rather than the economy,” Cohen told CNBC's "Squawk Box" this morning. “The U.S. economy continues to grow, obviously at a somewhat slower pace than last year. But moderate economic growth, job increases continue, and profit gains are also still there. When we put this all together in our valuation models, we come up with that 1550 conclusion for the S&P 500 at year end.”
Cohen said non-residential construction is growing at a 15% annual rate and exports are increasing at a 10% annual pace.
“When we take a look at where economic growth is coming from, not just in the United States, but around the world, what we’re basically seeing is better balance,” Cohen said. “We think there are a number of ways to participate in it. For example, some of the U.S.-based capital goods companies look reasonably attractive. We also like selected U.S. technology companies and even some U.S. consumer companies.”