Stocks in 'New Bull Market,' But Climb Will Be Slow: Cohen

Stocks are in a "new bull market" and its main benchmark, the S&P 500, should rise from the current 1000 to the 1050-to 1100 range by the end of the year, widely followed market guru Abby Joseph Cohen told CNBC.But Cohen, president of global markets institute at Goldman Sachs, said the recovery will be slow.

“We do think that the new bull market has begunit may prove that it started in March of this year,” Cohen said in a live interview. “We’ve talked about the staircase pattern of recovery in an equity market. Even if this is a new bull market, don’t expect it to look like a Vexpect it to look like a series of upward steps.”

Cohen said cyclical sectors will lead the new bull market, including energy, technology, and financials. She added that stocks should likely perform better than bonds. “Over the last year or two with all the difficult problems in the financial services sector, many of us have lost track of the fact that most of these stocks do follow economic growth. So when GDP is doing well, financial services tend to do well at the same time,” she said.

The third quarter is looking stable for companies, said Cohen as most firms have held profit margins up well even during the difficult portion of the recession. She said the cost containment and improvement in margin would be beneficial for companies in the second half of the year.Additionally, because companies and investors tend to look at profits on a year-over-year basis, "the third and fourth quarters of last year were dreadful so the third and fourth quarters of 2009 will not only good, but fabulous by comparison,” she said.

In terms of the unemployment situation, Cohen said there are slow, but steady signs of improvement in the labor market.
“Whether the [employment] number comes in light or unpleasant tomorrow, we’re seeing improvement even in the labor marketit appears the job losses are slowing and there is some job creation going on,” she said. “But labor markets are unlikely to turn all at one or on a dime. We have many more months of difficult labor situation ahead even if the recession using GDP or industrial production is almost over.”