An interest rate reduction by the Federal Reserve, if it were to happen, probably wouldn't lead to a big increase in stocks, the chief U.S. equity strategist at Goldman Sachs told CNBC on Tuesday.
"A lot of that rise in the market, in my estimation, is already behind us," said Goldman's David Kostin in a "Squawk on the Street" interview. "Ninety percent of that rally has been about multiple expansion."
With the market expecting a Fed rate cut later this month, actually getting one won't do much, he predicted. "What new, incremental information are we going to get to push the market higher? The answer is, not a lot."
"If there was to be a shift from that direction, there'd have to be a lot of jawboning and speechmaking in the next several weeks" before the two-day Fed meeting July 30-31, he added.
In the meantime, investors will be looking for clues on rates and the economy this week when Fed Chairman Jerome Powell appears before a House committee Wednesday and a Senate panel Thursday.
Kostin said Goldman is currently projecting two rate cuts this year due to the Fed's reluctance to go against market expectations.
Against that backdrop, Kostin is sticking with his price target of 3,000 for the S&P 500 by year-end, putting Goldman near the middle of expectations from the Wall Street analysts followed by the CNBC Market Strategist Survey.
While tracking for its third negative session in row Tuesday, the S&P 500 remains less than 1% below last week's all-time record highs and up about 18% in for all of 2019. The index just capped off its best first half of a year since 1997.
If the U.S. were to reach a trade deal with China, that could boost markets, Kostin acknowledged. But he added Goldman does not expect an agreement in the near future.