I think a blow to the market sentiment might happen if Gm and or Chrysler fail to restructure enough to survive. Apparently this week is some sort of deadline. Having said that any sell off will rebound once people realize its not the end of the world and these companies probably get reincarnated as smaller very different companies. Its not like their factories dissapear if the business fails. If the Auto workers are wise they will make some concessions to help save the companies in present state, or they might find themselves making job applications for their jobs to a different company at much less of a salary.
The management of UAW won't make concession. They want to be seen as working for the benefits of the auto workers. Thats what they get paid for. But their tough stand is going to backfire and bring down the auto companies. I wish some one would put some sense into the brass of UAW.