[paulddraper]

It basically is. It represents the state of capital investment, which as it is turns out is important in a capitalist economy.

The stock market would not be the economy in say, a Marxist system.

[srssays]

For a counterexample see Brexit. The FTSE 100 went up after Brexit, when other economic indicators were negative, because it primarily contains large multinationals which are insulated from the local economy.

So a stock market index is only correlated with the local economy if there are few multinationals.

[pacaro]

Well, arguably the FTSE went up because the pound plummeted.