In the Panic of 1907, our economy plunged. Steel output -60%, iron -55%, imports -26%, unemployment soared, doors closed, rent wasn't paid. Economic output cratered for 6 months. GDP down 10% in 1908 but had quarters down 25%. Yet, stocks rose 44% in 1908. https://www.jstor.org/stable/pdf/1882797.pdf
and please don't infer from this that I think stocks are going higher. I have no idea where the market is going. My general point is that this isn't the first time that stock markets have been hard to reconcile with economic reality. It's an argument that market timing is hard
Another interesting point about 1907 is JP Morgan acted as the Fed (before the Fed existed) and saved the banking system. This didn't prevent a bad economy though. But unlike the Fed's actions in 1930, it prevented a prolonged depression. But pain was everywhere in 1908
The author of the piece I linked to above was perplexed about the stock market's recovery, just as we are today (myself included). I think the best thing to do is focus on individual valuations. I've always felt trying to predict markets is difficult, but this is a great example
This is one more interesting note. In late 1907, economists thought we were headed for a depression, with one firm calling it the worst in US history, and we had very major depressions before that. In 1930, they thought we were on our way to recovery.