The S&P 500 will rise almost 12% in 2005, ending the year at 1,325, forecast Abby Joseph Cohen, managing director and chair-investment policy committee, global investment research, Goldman Sachs in a report she co-wrote. That's up from 1,188 at the close of Dec. 10.
"We expect equities to outperform bonds, which we would underweight in a model portfolio," according to the report produced by Ms. Cohen, Michael A. Moran, vice president, and Katerina Shaustyuk, business analyst. "Security selection should, in general, favor economic growth and beta. U.S. economic growth will likely continue to exceed that in other large industrial nations. Core inflation will drift, not gallop, higher. The Federal Reserve will persistently raise short rates in an incremental manner. S&P 500 operating (earnings per share) will rise 5% to 10%, depending on accounting assumptions."