Stead curled a tremendous shot in off the post to break the deadlock, and Jon Walters sealed the points with an 86th-minute header.
Town also hit the woodwork three times and largely kept Reading at bay, although the visitors did have one or two bright moments during the game.
Blues boss Jim Magilton made four changes as he continued to search for a winning combination, with Stead, on loan from Sheffield United, making his debut.
Reading had the first chance on nine minutes when Shane Long's clever ball freed Jimmy Kebe, but Richard Wright managed to push his shot wide.
Town hit the woodwork for the first time on 21 minutes when Stead's cross picked out Pablo Counago who nodded against the crossbar.
Walters had the ball in the net on 30 minutes but he was offside as he converted David Wright's cross.
Stead shot just wide from an Owen Garvan cross before the luckless Counago hit the bar again with a fierce shot on the turn.
As half-time approached Richard Wright tipped over a Kebe chip and from the ensuing corner Alex Pearce prodded over from close range.
After the break Alan Quinn shot wide after a neat move involving Counago and Stead, and then the winger forced a fine diving save from Marcus Hahnemann with a 20-yard shot.
Town broke the deadlock on 63 minutes when Stead curled home from the angle of the box, leaving Hahnemann helpless.
Another of Town's loanees, Moritz Volz, cleared off the line from sub Noel Hunt's header before Town hit the woodwork yet again through a Quinn drive.
Walters made certain of victory four minutes from the end when he nipped in around the back of the visiting defence to nod home from Quinn's cross.
There was still time for Hunt to flick a header against the bar and Town sub Kevin Lisbie to miss an open goal to round off a thoroughly entertaining game.