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Cohen sees Dow at 8,700
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February 2, 1998: 8:14 p.m. ET
Strategist believes brunt of Asian crisis will be felt in first half of '98
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NEW YORK (CNNfn) - Famed Wall Street strategist Abby Joseph Cohen said U.S. companies with high Asian exposure will feel the brunt of the crisis in the first half of the year, but should emerge with minimal damage.
Appearing Monday on "Moneyline With Lou Dobbs," Cohen, co-chair of Goldman Sachs' investment policy committee, said the strong domestic economy will help pull companies through. (179K WAV) or (179K AIFF)
Famous for her accurate stock projections, Cohen is currently estimating the Dow Jones industrial average could rise at least another 1,000 points this year to 8,700.
"I would hope we can raise that. We're making conservative estimates on profits and [price to earnings] ratios," she said.
Speaking on Monday's 200-point gain in the Dow , Cohen said investors as a whole are breathing a big sigh of relief.
"Fourth-quarter earnings came in quite good and companies are telling us 1998 is starting off on good footing. Inflation is under very good control," she said.
Cohen said Goldman Sachs is estimating earnings growth will average about 8 percent in 1998, although if the global economy improves before the end of the year, that could grow to the low double digits.
Among the sectors that currently look attractive to Cohen are American financial service stocks, including larger banks such as Citibank (CCI) and Chase Manhattan (CMB). The fact that they have minimal Asian exposure makes them especially attractive bets, she said.
In technology, Cohen said she likes IBM Corp. (IBM) and Microsoft Corp. (MSFT)
One area where the outlook is not quite as certain, Cohen said, is small- and mid-cap stocks.
"As investors become comfortable that this year will be a good one, they will be adding those to their portfolios," she said.
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Goldman Sachs
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