(Bloomberg) -- Goldman Sachs' famously bullish strategist Abby Joseph Cohen has let a shade of doubt creep into her usually sunny views on the stock market.
The firm’s equities strategist David Kostin sees the S&P 500 Index reaching 2,850 by the end of 2018, below the average estimate of 2,940 among strategists tracked by Bloomberg. Cohen urged caution if the gauge trades that high.
“You need to have valuation support to be at sustained high levels” in the stock market, Cohen said in a Bloomberg Radio interview Tuesday with Tom Keene and Jonathan Ferro. With the S&P 500 at around 2,850, “several years of ongoing profit growth and no recession” are priced in, she said.
The S&P 500 reached a record of almost 2,873 on Jan. 26. But it’s fallen back over the past couple of weeks as volatility rocked markets and is now at around 2,650.
Cohen also said that Goldman strategists “remain concerned about fixed-income.” Bonds “will be rising in yield,” she said, “not just in the U.S. but around the world.” The recent drop in bond prices “should not have been a surprise to anyone,” she continued.
Cohen, who’s president of Goldman’s Global Markets Institute, also said that “government policy coming out of Washington, to my eyes, is not supportive of sustainable intermediate and long-term economic growth.”
She cited changes in tax policy, budget proposals, infrastructure plans and trade policy as factors that don’t help longer-term growth.
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