May 1 (Bloomberg) -- The Standard & Poor’s 500 Index may jump 20 percent to 1,050 over the next six to 12 months as investors buy stocks trading at low valuations, said Abby Joseph Cohen, Goldman Sachs Group Inc.’s senior investment strategist.

“You could see the market sustain at these levels,” Cohen, 57, said in a Bloomberg Radio interview. “We’re going to set a new trading range much higher than the trading range in February and March.”

Cohen was replaced as Goldman Sachs’s chief forecaster for the U.S. stock market a year ago. She had been the second-most bullish Wall Street strategist at the start of 2008, a year when the S&P 500 tumbled 38 percent to 903.25 for the steepest annual loss in seven decades. Cohen predicted in December 2007 that the index would end last year at 1,675. David Kostin took her job.

The S&P 500 closed at 872.81 yesterday, or 29 percent higher than the 12-year low reached in March. Kostin projects the index will finish this year at 940, which is also the median estimate among 11 strategists tracked by Bloomberg News. The measure closed between 676.53 and 869.89 in February and March.

Stocks have rallied since March 9 as companies from American Express Co. to Ford Motor Co. posted better-than- estimated earnings and investors speculated U.S. Treasury Secretary Timothy Geithner’s plan to finance the purchase of as much as $1 trillion in illiquid assets from banks will help end the global recession.

‘Thoroughness’

Cohen said the Federal Reserve’s delay in releasing stress tests on the biggest U.S. banks isn’t worrisome. Executives from the lenders are debating preliminary findings with examiners, according to government and industry officials. The results, originally scheduled for publication on May 4, won’t be revealed until May 7, according to people familiar with the matter.

“They’ve been having discussions with the banks about the appropriate next steps,” Cohen said. “If anything, the slight delay indicates the thoroughness” of the review.

The S&P 500 Financials Index of 80 banks, insurers and investment firms surged 78 percent through yesterday from the 17-year low reached on March 6 amid speculation the worst of the credit crisis is over.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Thomas R. Keene in New York tkeene@bloomberg.net.

Last Updated: May 1, 2009 10:27 EDT