Firstly stock market do not act as a index to the entire economy. Nature of market and economy are not the same. Economy is a system under which money, industries and commerce are organised
Whereas stock market refers to public market and are measured by the index. Stock market is forward looking entity .Whereas economy is inverted looking it forecast what was history.In a efficient market, investors tend to build expectations into prices paying a high price for expected growth. Record breaking jobless number are bad economic data but they will not drive down market unless they were expecting better than that.
The relationship between the stock market and the economy has little to do with what’s happening in the economy and a lot to do with what is happening in the economy relative to what was expected.
