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Quick Take: Auto Sales Drive Market Higher

Stocks in this article: FGM

NEW YORK ( TheStreet) -- Strong sales in June were another step in the the automakers' recovery, and TheStreet's Debra Borchardt is with Keith Bliss offering a deeper examination on how the recovery in the auto sector is affecting the overall economy.

While U.S. indices were indecisive about which direction to go, auto sales released throughout the morning have provided an upside bias. Ford (F) posted huge numbers, with June sales up 13.4%, above the 11.7% estimate from analysts.

While General Motors (GM) had a lower bar to hurdle, the company still posted one of its best sales months since 2008.

As Borchardt pointed out, the Ford F-Series pickup trucks have been the leader of the resurgent sales in 2013. But the price tags on these units are bigger than the trucks themselves, which suggests that consumers finally have confidence to go out and spend.

Bliss confirmed the idea, adding that he just bought a car and picked it up yesterday. He thinks auto sales will likely continue to outperform for the rest of 2013 and into 2014.

The auto industry is a lot like the housing industry due to its trickle-down effect. When sales are strong, the automakers have a lot of companies building supplies and parts for them, which in turn makes those companies more profitable.

While the effect of auto sales on the gross domestic product is unknown at this point, it should have a positive effect should the seasonally adjusted annual rate (SAAR) stay in the 15 million-17 million units range.

Bliss added that higher auto sales continue to "speak well" for the overall growth of the economy and its trajectory.

-- Written by Bret Kenwell in Petoskey, Mich. .

Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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