The stock market, roughly, represents the state of the economy* as a bunch of algos and people think it is likely to be in 6-12 months. In this context, the current unemployment numbers don’t mean anything. Remember, the stock market is a leading indicator, not a lagging one.

However, the stock market has been experiencing and is currently experiencing extreme distortions because bailouts never really let the market find a natural price for anything. Thus, among other problems, nearly all of the risk has been shifted to small investors and unwise ones. This has been occurring to some extent since 2001, but really ramped up in 2008 and after.

My larger point is that the stock market never represented the state of the economy. That’s not its goal, as much as a discrete-time stochastic process can represent anything over the short term.

*This is an extreme oversimplification, because its medium-term behavior (2-3 week time slices) more represents the earnings of companies versus their price now and their expected price in the future, discounted by risk. (And risk is just another name for uncertainty spread across the future).