Stocks up on GM, Bear Stearns

NEW YORK (CNNMoney.com) -- The stock rally got its second wind late Wednesday afternoon after new reports added credence to market talk that Bear Stearns is looking to sell a minority stake to another financial firm.

Stocks had already risen in the morning after General Motors and its union reached a deal to end the two-day strike.

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The Dow Jones industrial average (Charts), the broader S&P 500 (Charts) index and the tech-fueled Nasdaq composite (Charts) all jumped with about 20 minutes left in the session.

The New York Times reported late Wednesday afternoon that Bear Stearns (Charts, Fortune 500) is in serious talks with a number of outside investors, including Warren Buffett, about selling as much as 20 percent of the firm.

The report seemed to confirm market rumors about deal talk that had surfaced earlier in the session.

Here's what was moving in the late afternoon.

General Motors and the United Auto Workers Union reached a tentative agreement early Wednesday to end the two-day strike, according to the automaker and union.

That sent GM (Charts, Fortune 500) shares up 6 percent and also lifted shares of rival Ford Motor (Charts, Fortune 500).

"We seem to be reacting to GM today, although I'm not sure GM is pivotal in the overall economic scenario," said Ron Kiddoo, chief investment officer at Cozad Asset Management.

"I think really we are just marking time until the September jobs report next week and the start of the quarterly earnings reporting period a week or so after that," he said.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by more than three to two on volume of 850 million shares. On the Nasdaq, advancers beat decliners nine to five on volume of 1.44 billion shares.

Merrill Lynch (Charts, Fortune 500) slipped on negative brokerage notes from Credit Suisse First Boston and Goldman Sachs, Briefing.com reported.

Oil prices did an about-face from the morning, turning higher. U.S. light crude oil for November delivery rose 77 cents to $80.30 a barrel on the New York Mercantile Exchange. Prices had fallen in the morning after a government report showed weekly crude supplies showed a surprise rise.

Last week, the October contract settled at a record high of $83.32. However, the record price remains below inflation-adjusted highs hit in the early 1980s, which would be equal to at least $95 a barrel today.

Tech stocks surged Tuesday, helping the broader market stabilize after profit warnings from Lowe's and Target triggered fears about weakening consumer demand.

Economic reports later in the week on personal income and spending will give a better sense of how the consumer has been holding up following the summer's financial market turmoil.

Ahead of that, the government released its August durable goods orders report Wednesday. Orders fell 4.9 percent in the month after rising 6.1 percent in the previous month. Economists thought orders would fall to 3.5 percent, according to a Briefing.com survey.

However, investors seemed to take the weak report in stride, perhaps figuring that it adds ammunition to bets that the Federal Reserve can continue cutting interest rates.

Last week the central bank cut the fed funds rate - a key short-term interest rates that affects consumer loans - for the first time in four years, saying that the credit and mortgage market mess could threaten the economic outlook. Investors are hoping that the central bank will continue to cut interest rates.

Lower interest rates speed up the flow of money through the banking system, which is good for the economy, corporate profits, and by extension, stocks. But the risk is that too much liquidity could drive up inflationary pressures.

Treasury prices rose, erasing morning declines. The advance lowered the yield on the 10-year note to 4.62 percent from 4.63 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell to another record low versus the euro before bouncing back a bit, and also inched lower versus the yen.

COMEX gold for December delivery fell $3.30 to $735.50 an ounce.