The S&P 500 could sink as much as 20% if conflict between Israel and Iran escalates or is dragged out a lot longer, RBC said in a note.

Stock futures rebounded slightly early Monday as the spike in oil prices due to the escalating conflict between Israel and Iran eased for a moment. Stock gains were muted as investors remained concerned about the rising geopolitical risk to the global economy.

Israel attacked the energy infrastructure of Iran, a major oil producer over the weekend. Yet prices of oil were falling Monday. Escalation of the war is a major risk for oil as Iran is the third-bigg

Keep an eye out for signs of labor-market weakness, as well as the risk that rising oil prices could put more upward pressure on inflation.

Treasury yield jumped 6.9 basis points on Friday to $4.426, reversing a dip in the immediate aftermath of the attacks.

Hedge funds took the most bullish stance on US crude since January in the week before Israel launched strikes against Iran’s nuclear program, putting them in a position to profit from this week’s jump in oil prices.

JPMorgan Chase & Co. said oil could reach $130 in a worst-case scenario. The US and Iran are scheduled to hold a sixth round of nuclear talks in Oman on Sunday.