Stock Market Update

[BRIEFING.COM] The S&P 500 continues to trade near its highs for the session, lurking just below the 7,500 level that was first eclipsed on May 14. Today's move has been spurred by relatively broad-based participation, evidenced by a 0.9% increase for the equal-weighted S&P 500 that is outlegging the 0.6% gain for the market cap-weighted S&P 500.

The small-cap Russell 2000 (+0.9%) is also outperforming today. Small-cap stocks have been bolstered by the possibility of sliding gas prices in the event there is a peace deal between the U.S. and Iran.

Lower gas prices would be a most welcome development. Rising gas prices were a driving factor behind the increase in inflation expectations seen this morning in the final May reading for the University of Michigan Consumer Sentiment Index, which slid to a record-low 44.8. Year-ahead inflation expectations were a lofty 4.8%.

Shorter-dated Treasury securities, which are more sensitive to changes in monetary policy, did not react well to the inflation expectations. The 2-yr note yield is up three basis points to 4.13%, leaving it well above the current target for the fed funds rate of 3.50-3.75%.