As the supply of workers runs short, employers begin to bid up the price of labor - in short, they start handing out raises to keep good employees, and paying up to lure employees from other companies. As more workers get more money, they spend more, which increases demand. Eventually, businesses begin pushing up prices, people start paying those prices, and an inflationary spiral begins. Normally, the Fed pushes up interest rates to slow the economy and put a brake on the inflationary cycle. Rising rates means higher mortgage prices, which depresses the housing market.
Higher rates mean that bonds are tougher competition for the stock market, which means lower prices.
A slower economy means higher unemployment. It means, quite simply, that the Fed has enormous resources to slow the economy, which, ultimately, will slow the stock market as well. In addition, they say, Alan Greenspan is a friend of technology. After all, technology increases productivity, which fights inflation. All quite true.