Stock Market is not supposed to be a reflection of the economy as-it-is but a predictor of where the economy will be in future.
When stocks go up amidst rising unemployment, people wonder WTF. Pundits explain that stock market is leading indicator. But I think there's more to it than that.
"Stock market is a giant coordinated attempt to predict the economy", not reflect it ~ https://t.co/7jLngDkjJ4— Ketharaman Swaminathan (@s_ketharaman) May 6, 2020
I read an interesting article on this subject recently.
Given below is a tl;dr version:
Techno Optimists haven’t lost touch with reality – equity values simply no longer depend on the functioning of society. If you zero in on the companies most negatively affected by the virus, including airlines and leisure stocks, they only make up 10 to 20% of the S&P 500. A lot of the stuff we’re worried about, it’s just not a big chunk of the S&P 500. The market isn’t the economy. Capitalists don’t need it to be safe for you to leave your house – or possible for 30 million unemployed Americans to find jobs – in order to make healthy profits. The next industrial revolution will be livestreamed. Come on in, the S&P 500’s fine.