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NEW YORK (CNNMoney) -- Goldman Sachs cut its year-end target for the S&P 500 and trimmed back its outlook for 2012 earnings.
The investment bank now expects the S&P 500 (INX) to finish the year at 1,450, down from its January forecast of 1,500.
The call appears to be more cautious than bearish. Even with the downard revision, the S&P 500 would be up 15% from 2010. The index is currently at 1,315.
Goldman Sachs (GS, Fortune 500) also reeled in its outlook for 2012 corporate earnings, predicting S&P 500 companies will log earnings per share of $104 for the year, down $2 from its prior forecast.
Goldman said "slightly higher inflation and oil prices" will pressure profit margins. Crude prices have been above $100 a barrel for much of this year.
While that's not necessarily good for consumers, it is good for energy companies. Goldman recommended being overweight in energy, saying it expects 2012 earnings per share in that sector to bump up about $2.
The energy sector is up almost 11% this year, second only to health care. And shares of El Paso Corp. (EP, Fortune 500), Cabot Oil & Gas (COG) and Marathon Oil (MRO, Fortune 500) have led the gains.
Earlier this week, Goldman raised its forecast for Brent crude -- the European benchmark -- to $120 per barrel for 2011, and $140 per barrel by the end of 2012. That marked a reversal from Goldman's prior call, made last month, that oil prices would plunge.
The bank also raised its outlook for the consumer staples sector, noting that food inflation costs are likely to peak later this year.
Within the sector, Goldman said it expects food, beverage and tobacco stocks to perform well. So far this year, the consumer staples sector is up nearly 8%, with shares of Dean Foods (DF, Fortune 500), Lorillard (LO), maker of Newport, Kent and other cigarette brands, and Chipotle Mexican Grill (CMG) among the S&P 500's top performers.
Goldman has 'buy' ratings on Coca -Cola (KO, Fortune 500), Pepsico (PEP, Fortune 500), Coca-Cola Enterprises (CCE, Fortune 500), Philip Morris (PM, Fortune 500), Lorillard, Dean Foods, General Mills and Sara Lee. Collectively, these eight companies account for 35% of the entire sector's market capitalization. 
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 32,627.97 | -234.33 | -0.71% |
| Nasdaq | 13,215.24 | 99.07 | 0.76% |
| S&P 500 | 3,913.10 | -2.36 | -0.06% |
| Treasuries | 1.73 | 0.00 | 0.12% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Ford Motor Co | 8.29 | 0.05 | 0.61% |
| Advanced Micro Devic... | 54.59 | 0.70 | 1.30% |
| Cisco Systems Inc | 47.49 | -2.44 | -4.89% |
| General Electric Co | 13.00 | -0.16 | -1.22% |
| Kraft Heinz Co | 27.84 | -2.20 | -7.32% |
| Overnight Avg Rate | Latest | Change | Last Week |
|---|---|---|---|
| 30 yr fixed | 3.80% | 3.88% | |
| 15 yr fixed | 3.20% | 3.23% | |
| 5/1 ARM | 3.84% | 3.88% | |
| 30 yr refi | 3.82% | 3.93% | |
| 15 yr refi | 3.20% | 3.23% |
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