According to Bloomberg,
Value remains in the U.S. stock market even after the Standard & Poor’s 500 Index (SPX) surged 25 percent this year to a record, according to Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc.
Price-earnings ratios are lower now than the last time stocks were near these levels, Cohen said in a Bloomberg Radio interview with Tom Keene today. Janet Yellen is one of the finest policy analysts in the U.S. and deserves to be confirmed as the next chairman of the Federal Reserve, said Cohen. She forecasts the S&P 500 will reach 1,900 by the end of 2014, a 6.6 percent gain from today’s close.
“Companies right now are increasingly enthusiastic about the dynamism in the economy,” said Cohen. “There’s value in the market right now. The U.S. economy will likely grow faster next year.”
The S&P 500 today gained 0.8 percent to a record 1,782 in New York, surpassing a previous high set on Oct. 29 and heading for the steepest annual rally in a decade. Cohen’s forecast for the gauge to reach 1,900 by the end of 2014 matches the median estimate in a Bloomberg news survey of strategists this month.
Gains in stocks have come as the Fed maintained its unprecedented stimulus. Yellen, nominated to be the next Fed chairman, said today that the economy and labor market are performing “far short of their potential” and must improve before the central bank can begin reducing its $85 billion in monthly asset purchases. The remarks are from testimony prepared for Yellen’s nomination hearing tomorrow before the Senate Banking Committee.