Goldman Expects the S&P 500 to Fall as Much as 10 Percent Before Ending the Year at 2,100

According to Goldman Sachs Group Inc., now is not the time to buy stocks.

In a new note from Chief U.S. Equity Strategist David Kostin and his team, the firm says it expects there to be a pullback of as much as 10 percent in the S&P 500 before it makes a comeback to 2,100 later this year.

"Although investors appear complacent in the wake of Brexit, a maturing economic cycle with elevated valuations, decelerating buybacks, and growing political uncertainty provide the basis for potential market weakness in the second half," the team writes. "However, above-trend U.S. GDP growth, a cautious Fed, and an earnings recovery will return the S&P 500 to 2,100 by year-end, extending the flat market of the past two years."

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With 3-month, 6-month, and 12-month S&P 500 price targets of 1,950, 2,100 and 2,150, respectively, the team has been recommending that clients invest in firms with high dividend yields and high domestic exposure due to the rising uncertainty in both the economic and political arenas. Unfortunately for the broader stock market bulls, the team expects the uncertainty to move higher yet as the U.S. presidential election draws closer.

The sectors that provide the best opportunities, based on Goldman's historical analysis, include health care, telecom services, and consumer discretionary. The riskier bets include energy, materials and industrials.