) -- Retail investors are jumping back into the stock market, a bullish sign for both the online brokers as well as banks providing trading services.

Household net worth increased by 4% in the second quarter, following six straight quarters of contraction, according to a report from JMP Securities that draws on Federal Reserve data. Investors also upped their allocation to equities relative to cash and bonds, JMP's report states.

JMP analyst Michael Hecht highlights

The Charles Schwab Corporation

(SCHW) - Get Report

as the best way to take advantage of the trend. He has a $23 target price on Schwab, which he calls a "best in class asset gatherer."

Hecht has his reservations about


(ETFC) - Get Report

, as he noted in a recent interview with

. Still, a resurgent retail investor can only help E*Trade, as well as other online brokers like

OptionsExpress Holdings

TradeStation Group



TD Ameritrade

(AMTD) - Get Report

.Last week, a number of online brokers reported jumps in trading activity for August, including E-Trade, where daily average revenue trades, or DARTs, totaled 208,495, an increase of 18.3% on a sequential basis, and 37.4% from last year's equivalent level. E-Trade also said that, as of Sept. 11, DARTs were already above 200,000 for the month to date.

Raymond James Financial

(RJF) - Get Report

also ought to benefit from more aggressiveness on the part of its retail clients. A report from Sandler O'Neill notes Raymond James saw client assets increase by more than 3% in August, while securities commissions and fees were up 5% from July. Sandler nonetheless maintains a "Hold" rating on Raymond James.

Morgan Stanley

(MS) - Get Report


Bank of America

(BAC) - Get Report

, with their giant brokerage forces, will also benefit if the return of the retail investor is for real. So will

General Electric

(GE) - Get Report

, which remains a popular


stock despite a controversial decision to cut its


earlier this year.

But what if the retail resurgence is not for real? At this point, my guess is household wealth is up almost entirely because of people cutting costs and the plus-50% rally in the major U.S. equity indices since March. That kind of outperformance, however, isn't sustainable, and there is still reason to be cautious in the most recent jobs data, which saw the national unemployment rate increase 0.3% on a sequential basis to 9.7% in August. People will need to start finding jobs if the retail rally is going to last.


Written by Dan Freed in New York