The US stock market should continue to move ahead even as the economy slows down, Goldman Sachs strategist Abby Joseph Cohen told CNBC.
A generally rosy forecast was tempered with a warning that Goldman remains under consensus for economic growth as stimulus dries up and an inventory build ebbs.
"Our feeling is that the recession is likely over," Cohen said. "Even so, we think that economic growth may decelerate in the second half of this year. The inventory boost is likely over. We think we start to see a lessening impact of the fiscal stimulus we've enjoyed the last two quarters."
Goldman Sachs earllier had said it expects the 10-year yield to drop to 3.25 percent, well below consensus of between 4 and 4.25 percent and reflective of a deflationary environment.
Yet against that backdrop the firm thinks stocks will continue to move higher, with the Standard & Poor's 500 hitting 1,250 by year's end, about 7 percent higher from the current level.
That projection "doesn't mean we get there right away, doesn't mean we there in a straight line. But we think that gives us a sense of the general direction."
Goldman also is out of consensus on its China projection, but in the other direction: Cohen sees growth in China at about 10 percent per year even as other analysts predict a slowdown while the country combats both an inflationary environment and troubles in its real estate market.
"While we certainly recognize that the government there is making adjustments on its rates and lending policy, we do think the intermediate- to long-term (outlook) will be for good growth," she said.
She also predicted a strong environment for commodities, particularly in energy and metals, as world growth hits 4.5 percent.
With Goldman Sachs facing a wave of criticism and charges from the Securities and Exchange Commission, Cohen said the firm is remaining committed to investor service and has gotten good feedback from clients despite the turmoil.