U.S. stocks have entered a new bull market, and the S&P 500 index could rise as much as 10 percent from current levels by the end of this year, Goldman Sachs strategist Abby Joseph Cohen said on CNBC on Thursday.

Goldman Sachs sees the benchmark Standard & Poor's 500 index in a range of 1,050-1,100 toward year-end, said Cohen, the firm's senior investment strategist and president of its Global Markets Institute. That range, she said, is where we should be toward the end of this year.

We do think the new bull market has begun, Cohen said. It may prove it began in March of this year.

Stocks have recovered sharply since hitting 12-year lows in early March, with the S&P 500 index now up 47 percent since trading as low as 666.79 points in March. In early afternoon trade on Thursday, the S&P was off 0.53 percent at 997.44 points.

Cohen also said she expects the labor market to improve, but in an erratic way.

It appears job losses are slowing, and there is some job creation going on, she said. But we have many more months of difficult labor situation ahead, even if the recession, using GDP or industrial production, is almost over.

The U.S. labor market has remained weak even as other parts of the economy have improved, with the unemployment rate at just under 10 percent. Friday's July employment report from the Labor Department is forecast to show the jobless rate at 9.6 percent, its highest since June 1983, and 320,000 monthly job losses, according to a Reuters survey.

Cohen said sectors tied to economic improvement are likely to be the best stock picks for right now, including energy, technology and financial companies.

Many of us have lost track of the fact that most of these (financial) stocks do follow economic growth, so when the GDP is doing well, financial services tend to do well, she said.

Goldman Sachs on Wednesday raised its gross domestic product forecast for this year's second half to an annualized rate of 3 percent, from a prior outlook of 1 percent, citing an expected increase in production by companies.

Many companies trying to be very cautious over last year really squeezed inventories down to levels that are unsustainable, Cohen said on CNBC. Even without any notable improvement in current demand, companies just need to have more stuff in the back room to get their business done.

(Editing by Leslie Adler)