The possibility of an alliance with Nissan and Renault has boosted the stock and bonds of General Motors ( GM) from already heady levels. Given the fundamental troubles at the junk-rated automaker, investors' optimism about the proposal only makes the stakes higher and the fall potentially harder if the deal doesn't happen. GM shareholder Kirk Kerkorian's suggestion last Friday that the Detroit automaker ally with Nissan and Renault is just an idea thus far, but it sent GM's stock and bonds up about 8% on June 30. The rally punctuated the extent to which GM's securities have underpinned the performance of their broader universes this year. GM is the best-performing stock in the Dow Jones Industrial Average, up 51.5% through July 5 vs. 4.1% for the index. GM, whose current weighting in the Dow is 2.1%, is even more important to the high-yield bond market, as autos compose over 10% of junk bonds. GM and Ford ( F) have added about 1%, or 100 basis points, to the overall high-yield market's first-half total return of 3.14%, according to Lehman Brothers. Without the autos, the high-yield market returned 2.19% through June 30. The possibility the alliance doesn't become a reality could be a foil for those markets as much as it might be for GM. "The autos have tempered what could have been greater damage in the high-yield market amid the interest rate fears and stock market volatility," says Brian Hessel, managing partner at Stonegate Capital Management. High-yield spreads have only modestly widened as stocks have faced much rougher waters of late. GM Chairman and Chief Executive Rick Wagoner and his team are expected to treat the proposal as a hostile move to oust current management, and they are working on counter-arguments, according to a report Thursday in The Wall Street Journal. After the report, GM shares were recently down 0.7% at $29.21; its most volatile 8 3/8% bonds due in 2033 were off by about 1 point, or 1 cent on the dollar, to trade at 80 cents on the dollar.