"This is the best environment for stocks right now. You don't have rising interest rates becoming a problem. You don't have inflationary pressures. You do have earnings growth, said Tim Hayes, chief global investment strategist at Ned Davis Research in Venice, Fla. The firm has studied stock performance in a variety of economic environments going back decades. /one of the most positive indicators today, Mr. Hayes said, is that unemployment is a high 7.3%, but declining. When the unemployment rate is above 6% and falling, that is the best situation for the stock marked based on the performance of the S&P 500 back to the 1940s. Stocks average 13.5% annual gains when unemployment is above 6%, and 16.5% when the rate is that high and falling. Joblessness isn't good for ordinary people, of course, but stocks respond more to expectations for corporate earnings, inflation, interest rates and the like."