Goldman Sachs: S&P 500 Index to climb 8% in next 12 months

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The Standard & Poor’s 500 Index will climb 8% to 1,825 in the next 12 months as economic growth gains momentum, according to Goldman Sachs.

Bloomberg News reports that David Kostin, the bank’s chief U.S. equity strategist, recommends buying shares of companies that generate most of their revenue domestically.

The S&P 500 increased as data showed retail sales increased for a fourth consecutive month, a sign that American households are boosting spending as employment climbs.

'The real issue to focus on is that rising interest rates are a reflection of a better economy,' Kostin said in a Bloomberg Television interview from New York. 'The best strategy right now would be here, in the U.S, from now until the end of the year.'

U.S. equity strategists were too cautious on the rally at the beginning of the year, spurring forecasters from Goldman Sachs to Bank of America and Credit Suisse to boost year-end targets as the S&P 500 surged to highs. Current predictions indicate the index will retreat 10% to 1,677 by December, the average from a survey of 17 strategists compiled by Bloomberg.

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