U.S. stocks show little reaction to Trump’s extraordinary Venezuela action. Why investors see a bull case

The stock market showed little reaction to President Donald Trump’s extraordinary action in Venezuela as investors bet the attack, as well as the capture of leader Nicolas Maduro, would not lead to a bigger geopolitical conflict.

The Dow Jones Industrial Average rallied 343 points, or 0.7%. The S&P 500 and Nasdaq Composite rose Monday, up 0.6% and 0.8%, respectively.

The oil market rose just modestly, and energy stocks helped lift the market, as traders bet the takeover of Venezuela, which has the world’s largest proven oil reserves, will benefit oil and gas companies. Chevron, which already has an established presence in the country, rallied more than 7%. Shares of Exxon Mobil climbed more than 4%.

Historically speaking, geopolitical shocks have little lasting impact on the stock market. A review of the last 11 major geopolitical events showed that the S&P 500 on average was just 0.3% lower one week after the event, and 7.7% higher 12 months later, according to UBS. Indeed, markets historically have looked past even major developments, such as the U.S. bombing of Iran, the firm noted.

“While volatility is expected as the Venezuelan headlines will dominate the landscape, the overall market seems relatively unfazed by events so far,” said Jay Woods, chief market strategist at Freedom Capital Markets. “A quick resolution with little escalation threat has calmed any investor jitters for now.”

The event has put other countries on high alert. One analyst noted Denmark is in “full crisis mode” after Trump set his sights on Greenland following the attack. Russia’s reaction to the ouster of Maduro has been cautious.

But the lackluster response to a significant geopolitical development suggests investors do not expect the attack to escalate any further, in part because of Trump’s prior criticisms of conflicts drawn out in Iran and Afghanistan.

Indeed, Evercore ISI’s Matthew Aks agreed that the event is unlikely to be a major market mover, as he considers Trump’s threats to take over the country as more of a negotiating tactic. He added that Venezuela’s current oil exports are small and any efforts to develop the country’s infrastructure will be a longer-term story.

“Trump’s statement about the U.S. running Venezuela is getting a lot of attention, but we do not expect any immediate large-scale U.S. military action,” Aks said. “Rather, we interpret it as a colorful metaphor and negotiating tactic intended to maintain pressure on the remnants of the Maduro regime to cede power voluntarily.”

Instead, investors are remaining focused on the fundamentals in the stock market. Many find artificial intelligence, earnings growth, and easier monetary policy as reasons for optimism to start the new year. UBS said any underexposed investors should put any excess cash or bonds toward stocks, though the firm also said gold should remain an allocation.

“While developments in Venezuela may cause volatility, especially in oil markets, we expect the focus of investors to remain on fundamentals. We forecast nearly 10% earnings growth for the MSCI All Country World for both 2026 and 2027, contributing to further stock gains this year,” wrote Ulrike Hoffmann-Burchardi, global head of equities at UBS Financial Services.

“Against this backdrop, we rate global equities as Attractive,” she continued. “If investors are currently underallocated, we believe they should reallocate excess cash, bond, or high yield credit holdings to stocks.”