Recovery Signs Should Lift Market

NEW YORK (TheStreet) -- For most investors, the typical rules of investing have been thrown out the door as equity markets endured the worst financial and economic crisis in over 70 years.

After watching their portfolios diminish, most were dumbfounded by the equity markets when they surged nearly 50% above their March 9 lows.

So what does the future hold? It is hard to tell, but there are some positive indicators that the economy is recovering and that should be welcome news for the equity markets.

Most recently, the ADP Employer Services Report suggested that the situation is starting to ease on the unemployment front as the private sector shed 298,000 jobs in August, a drastic improvement from the 370,000 shed in July.

Additionally, the Labor Department reported productivity rose at a 6.6% annual rate in the second quarter of 2009, marking the largest advance in the last six years. This is important to the overall health of the economy because higher productivity generally results in the ability to sustain or even improve living conditions.

The third positive economic indicator came from a report that indicated factory orders rose in July. Many companies implemented lean measures to bolster profits, which included trimming inventories.

In an attempt to prevent stockpiles from further depleting, companies are replenishing inventories. This is a good sign because inventories are traditionally the leader in an economic recovery and the build-up, or replenishment of stockpiles, indicates a recovery is on the horizon.