(Reuters) – Goldman Sachs (NYSE 🙂 is adjusting its outlook for this and expects it to remain below the 5,000 mark in 2014, as rising inflation threatens to undo a nascent recovery of the U.S. economic.

The revised forecast of 4,900 point is a near 4% cut from the brokerage’s previous estimate, but is still 11% above the S&P 500’s Friday close of 4,418.64.

Since the start of the year the benchmark index was under severe pressure. It lost nearly 7.3% due to a variety of concerns, including interest rate increases and tensions in Ukraine. Investors are now cautious, while markets remain volatile.

In a Friday note, Goldman Sachs economists stated that “Uncertainty Abounds Regarding the Path of Inflation and Fed Policy,” in an op-ed.

The U.S. Consumer Prices rose strongly in January, resulting in the largest annual inflation increase in over 40 years. Inflation continues to rise above the 2% goal set by the U.S. Federal Reserve. The central bank of the United States is expected to adopt a more cautious stance in March, raising interest rates.

According to Goldman, economists anticipate seven rate hikes by 2022. But they see an upside in U.S. equity as the price of earnings and shares rise.

David Kostin from Goldman Economics stated that “the majority of earnings growth for the next 2 years will be driven by sales growth with limited net profit margin expansion.”