Assessing The Rate Hike

Goldman Sachs' chief market strategist, Abby Joseph Cohen, said the economic forecast is healthy, but investors should carefully assess the reasonable value of stocks.

Cohen gave her comments on CBS News' Face the Nation Sunday, in the aftermath of the Federal Reserve raising interest rates last week. Fed Chairman Alan Greenspan said that the federal reserve ought to pay more attention to the stock market.

Cohen interpreted Greenspan's remarks.

"One thing he talked about perhaps more than others was the rise in house prices and the way that's encouraging consumers perhaps to be spending more than they otherwise would be doing," said Cohen. "Stock prices are also having an effect on the economy."

Normally the economy drives home prices and stock prices.

"I think Mr. Greenspan is letting us know that he's watching," said Cohen. "One of the things Mr. Greenspan did do on was to remind us that we're all connected in a very circuitous way."

Cohen's long-term prediction for the market is optimistic.

"What drives stock prices ultimately is how long the economy can continue to grow, generating good profits and jobs," said Cohen. "As we take a look into 2000, we don't see it ending. We think that this is an economy that will continue to generate jobs and profits. Stock prices, we think, will continue to rise roughly in concert with the improvement in corporate profits."