General Motors ( GM), the poster child of the flagging U.S. automotive industry, has kept the equity and credit market nervous this year, and with reason. But on Monday, news of GM's progress in its negotiations with the UAW brought a sense of relief to blue-chip stock proxies and corporate bond markets as well. In that sense, Monday was the polar opposite of the unrest that occurred last May, when the possibility of the auto giant going bankrupt roiled U.S. financial markets. At that time, credit rating agencies cut GM's rating to junk, raising the alarm bells over its unsustainable cost structures and dwindling sales of sport-utility vehicles. On one of these fronts, at least, the carmaker seems to have made progress. On Monday, GM announced it reached a significant deal with the United Auto Workers to curb its ballooning health care costs. The deal paves the way for more union concessions on health care costs and other issues, at least for GM and its rivals in the auto industry, analysts say. Still, the automaker's road to a return to profitability remains full of challenges, as shown by GM's staggering $1.6 billion third-quarter loss, its fourth quarterly loss in a row. Under the agreement with the union, which still needs to be ratified by UAW members, GM would reduce its health care expenditures for hourly GM retirees by $3 billion on a pretax basis, generating annual savings of $1 billion. Overall, GM estimated that the deal would generate cost savings of $15 billion, or 25% of its hourly health care liability. The automaker also announced it would close more plants and cut at least 25,000 jobs by 2008. In addition, GM will seek offers for a controlling stake in its financing unit General Motors Acceptance Corp.