Story has been updated with early morning prices for Ford and GM shares.
DETROIT (TheStreet) -- Not surprisingly, record stock market performance is being matched by continued strength in the U.S. auto markets, with expected August automotive spending of $39 billion, the second highest monthly total in history.
However, the auto market, like other economic sectors, shows occasional signs of frothiness and easy credit, fueling concerns about a potential fallback.
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Car sales for August are expected to be flat compared with the same month a year earlier, partially because August will have 27 sales days this year, compared with 28 sales days in 2013.
Nevertheless, consumer spending on new vehicles in August is expected "to approach $39 billion, the highest level on record for the month of August and second-highest month ever behind July 2005 ($39.7 billion)," said J.D. Power analyst John Humphrey in a prepared statement.
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"The record consumer spending is fueled by both high sales volumes and high transaction prices," Humphrey said.
Auto sales numbers are among the best economic indicators because they track a major consumer purchase, are reported quickly after the month ends and are almost never revised. Car sales for August are scheduled to be reported on Sept. 3.
Ford (F) shares year to date are running ahead of the S&P 500, while shares in GM (GM) , hobbled by an ignition switch scandal that led to 27 million recalls this year, have slid.
Shortly after the opening bell on Wednesday, Ford shares traded down 7.5 cents to $17.29, while GM shares traded down 29 cents to $34.42. Year-to-date, Ford shares are up 12%, the S&P 500 is up 8% and GM shares are down 16%.
The pace of auto sales, tracked as the seasonally adjusted annualized sales rate, ihas been gaining ground this year. "We expect August U.S. light vehicle SAAR to track at roughly 16.6 million, representing a solid 5% improvement from 15.9 million in August of 2013, and a 1% increase from last month's 16.4 million," wrote J.P. Morgan auto analyst Ryan Brinkman in a recent report. TrueCar also forecasts an August SAAR of 16.6.
JD Power affiliate LMC Automotive projects 2014 sales of 16.3 million units, up 5% from 2013.
"As a very robust summer selling season winds down, optimism continues in the auto industry for the remainder of 2014, with expectations of economic growth beginning to catch up to the growth in autos," said LMC analyst Jeff Schuster in a prepared statement.
Auto sales have climbed steadily since they hit a 27-year low of 10.2 million in 2009. Sales reached 15.6 million in 2013. Sales of 16.5 million would equal the 2006 level.