May 7 (Bloomberg) -- Abby Joseph Cohen, who made her name with bullish calls during the Internet bubble, and Edward Keon, the most optimistic strategist on Wall Street, raised their forecasts for U.S. stocks as the Standard & Poor's 500 Index climbed toward a record.

New York-based Cohen, Goldman's Sachs Group Inc.'s chief U.S. investment strategist in New York, boosted her 2007 estimate for the S&P 500 by 3.2 percent to 1600. The index is within 1.3 percent of an all-time high reached on March 24, 2000, when Cohen was the top-ranked U.S. strategist.

Cohen, who lost influence after she underestimated the plunge in stocks from 2000 to 2002, wrote today that the outlook for the economy and corporate profits had spurred her to raise her estimates. First-quarter earnings at S&P 500 companies have risen three times faster than analysts' projections.

``We believe that recession is unlikely during the forecast horizon that extends yearend 2008 and this bodes well for equities,'' Cohen, 55, wrote in a note to clients. She boosted her 2007 estimate for the Dow Jones Industrial Average by 3.7 percent to 14,000.

The 30-stock Dow average, which posted four closing records last week, added 0.2 percent to 13,292.57 as of 11:12 a.m. in New York. The S&P 500 gained 0.2 percent to 1508.67.

Keon's Call

Prudential Equity Group LLC's Keon increased his 2007 forecast for the S&P 500 to 1650 from 1630, and said he expects the index to surge to 1880 by the end of next year. Keon, 54, echoed Cohen's optimism about economic and profit growth. He maintained the highest equity allocation on Wall Street at 90 percent.

``The U.S. economy and equity market have absorbed some heavy blows over the past several years, most recently the issue of subprime loans and housing,'' Keon wrote. ``Yet the economy and the market keep growing, hinting of underlying strength.''

The 409 S&P 500 companies that reported first-quarter results through last week on average posted earnings growth of 12 percent. Cohen raised her 2007 forecast for total earnings from S&P 500 members to $94 a share from $93, and introduced a 2008 estimate of $100.

Too Bullish

Goldman's Cohen, who was the top-ranked strategist in Institutional Investor's surveys in 1998 and 1999, stayed bullish on computer-related stocks for too long as the S&P 500 suffered a bear market from March 2000 to October 2002. She said in October 2000 that technology shares would be a good investment in 2001. The S&P 500 Information Technology Index tumbled 26 percent that year.

Her calls on the market in 2006 were more accurate. Cohen said on June 13 that stocks had fallen too far and the S&P 500 would rebound to 1400 by year end. The index set its low for the year that day and has since risen 23 percent.

Keon wavered from bullishness to bearishness during 2006. In February he cut his recommended equity weighting to 55 percent from 100 percent, retreating from a call that was the most optimistic since Bloomberg News began surveying Wall Street strategists in 1996. He then gradually nudged his allocation back up to 90 percent by September.

To contact the reporter on this story: Nick Baker in New York at nbaker7@bloomberg.net; Daniel Hauck in New York at dhauck1@bloomberg.net

Last Updated: May 7, 2007 11:24 EDT