G.M. Pacy with Union Sets Off a Rally


Stocks rose soundly yesterday after word that General Motors had a tentative contract agreement with the United Automobile Workers and that Bear Stearns might sell a share in the company.

G.M., one of the 30 stocks that makes up the Dow Jones industrial average, led the market higher from the outset with news that a tentative pact that ended a two-day strike could allow the company to shed some of its burdensome health care costs.

Rumors that Bear Stearns would sell a stake took on new urgency in the final hour of trading with a report that the billionaire investor Warren E. Buffett was a potential suitor.

“Certainly it’s good to have problems that have been overhanging Bear Stearns off the table, if that can be done. That should help the financials,” said William D. Rutherford, president of Rutherford Investment Management in Portland, Ore., alluding to the recent failure of two Bear Stearns hedge funds.

The Dow Jones industrial average jumped 99.50 points, or 0.72 percent, at 13,878.15. The Standard & Poor’s 500-stock index advanced 8.21 points, or 0.54 percent, to 1,525.42, and the Nasdaq composite index increased 15.58 points, or 0.58 percent, to 2,699.03.

Treasury prices also turned higher yesterday on surprisingly strong investor demand in a government sale of $18 billion in two-year Treasury notes. The benchmark 10-year Treasury note rose 2/32, to 101. The yield, which moves in the opposite direction from the price, fell to 4.62 percent, from 4.63 percent.

The dollar recovered slightly against major currencies yesterday despite lackluster economic data, but not before hitting another record low against the euro. Gold prices fell.

Oil futures ended higher, closing above $80 a barrel as a turbulent day ended with a late rally led by investors who saw an early price dip as a buying opportunity. Light crude settled at $80.30 a barrel on the New York Mercantile Exchange.

Wall Street shrugged off broader economic news from the Commerce Department, which said demand for durable goods fell in August by the largest amount in seven months.

Wall Street often regards such reports as good news because they can provide new reasons for the Federal Reserve to lower interest rates.

In addition to corporate and economic news, some of the session’s gains could be traced to the approaching end of the quarter.

“As you get closer to the end in the next couple of days, you could get some window dressing,” said Marc Pado, United States market strategist at Cantor Fitzgerald, referring to some investors’ plans to buy and sell stocks to shore up their end-of-the-quarter holdings.

G.M. jumped $3.26, or 9.5 percent, to $37.68, after workers agreed to return to their jobs after a two-day nationwide strike.

Bear Stearns had been higher throughout the session on rumors it would sell a piece of the company. The investment bank then doubled its gains after The New York Times reported that Mr. Buffett, among others, had shown interest in a minority stake in the company. The stock finished up $8.42, or 7.4 percent, at $122.66.