GM news boosts stocks

NEW YORK (CNNMoney.com) -- Stocks gained Wednesday morning, as investors welcomed news that General Motors has reached a deal with its union workers to end the two-day strike.

Falling oil prices added to the early positive tone.

The Dow Jones industrial average (Charts), the broader S&P 500 (Charts) index and the tech-fueled Nasdaq composite (Charts) all gained in the early going.

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

That sent GM (Charts, Fortune 500) shares up more than 4 percent and also lifted shares of rival Ford Motor (Charts, Fortune 500).

But broader gains were limited, as investors eyed rising bond yields, a falling dollar, still-high oil prices and a weak reading on durable goods orders.

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 slipped, raising the yield on the 10-year note to 4.65 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.

U.S. light crude oil for November delivery fell 33 cents to $79.20 a barrel on the New York Mercantile Exchange 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.

COMEX gold for December delivery rose $2.10 to $740.90 an ounce.