U.S. markets face geopolitical and corporate risks as investors assess Monday trading

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U.S. markets face risks

Highlights

Oil prices surge as U.S. and Iran trade air strikes over the Strait of Hormuz, with Iran claiming closure while the U.S. disputes it.
Apple sues OpenAI for trade secret theft, escalating tech sector tensions and reigniting the public dispute between Sam Altman and Elon Musk.
May technology layoffs hit 2024 highs, led by Amazon's historic cuts, with AI cited as the primary driver for the fourth consecutive month.

Market drivers shape the opening outlook

As reported by CNBC, traders are watching a broad set of developments before the opening bell, with futures pointing lower even after the S&P 500 ends last week on a gain.

The most immediate pressure comes from the latest exchange of air strikes between the U.S. and Iran over the weekend. U.S. Central Command says American forces hit dozens of targets to reduce Iran’s ability to continue attacks on international shipping through the Strait of Hormuz. Iran’s Islamic Revolutionary Guard says it has closed the strait until further notice, although the U.S. military disputes that claim and President Donald Trump says in an NBC News interview that the waterway remains open.

Oil prices jump at the start of the week as investors react to the renewed fighting over control of the strategic shipping lane. The market backdrop remains mixed, with the S&P 500 and Nasdaq Composite coming off their fourth winning week in five, while the Dow Jones Industrial Average ends its longest weekly positive streak since 2024.

Political developments are also in focus after Sen. Lindsey Graham of South Carolina dies on Saturday following what his office calls a brief and sudden illness. A preliminary report cited by his office says the cause of death is aortic dissection due to arteriosclerotic cardiovascular disease, and his unexpected death could complicate several Republican priorities in Congress as officials weigh who may fill his seat.

Technology, jobs and housing add to investor caution

Apple is escalating tensions in the technology sector after suing OpenAI on Friday, alleging the artificial intelligence company stole trade secrets in its push to build its own hardware products. The case marks a sharp turn for two companies that entered a partnership in 2024, and it comes after OpenAI announced plans last year to expand into hardware.

The lawsuit also revives a public clash between Tesla CEO Elon Musk and OpenAI CEO Sam Altman. Musk criticizes Altman in a post on X after the filing, while Altman responds by linking the renewed attacks to his company’s latest AI model release.

Investors are also tracking signs of stress in the labor market, especially in technology. Amazon has carried out the largest wave of layoffs in its history over the last year, and affected workers are entering a tech job market that is becoming more restrictive. Challenger, Gray & Christmas says layoffs across the industry in May reach their highest level since 2024, with artificial intelligence cited for a fourth straight month as the main reason companies give for cuts.

In Washington, a bipartisan housing measure becomes law on Saturday without Trump’s signature after he declines to sign it and also does not veto it. The 21st Century ROAD to Housing Act is designed to encourage homebuilding, expand financing and limit purchases by large investors, although experts say buyers should not expect home prices to fall immediately.

Oil’s jump on renewed U.S.-Iran strikes and the risk to shipping through the Strait of Hormuz put a fresh geopolitical premium back into crude, even without confirmed damage to major energy infrastructure. Our earlier article noted that markets were reacting primarily to the possibility of disrupted tanker traffic, higher insurance and freight costs, and uncertainty over whether the ceasefire framework still has practical force. It also highlighted that the key variable for prices is whether vessel flows stay open or meaningfully slow, which could keep the risk premium elevated.

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