U.S. stocks have shown little reaction to Trump’s extraordinary Venezuela actions. Why Investors See a Bull Market

Stock markets showed little reaction to President Donald Trump’s unusual actions in Venezuela. Investors were confident that the attack on Venezuela and the arrest of leader Nicolas Maduro would not lead to a larger geopolitical conflict.

The Dow Jones Industrial Average rose 343 points (0.7%). The S&P 500 and Nasdaq composite index rose 0.6% and 0.8%, respectively, on Monday.

Oil markets rose slightly, and energy stocks helped lift the market. That’s because traders were confident that a takeover of Venezuela, which has the world’s largest proven oil reserves, would benefit oil and gas companies. chevronwhich has already established a strong presence in the country, rose by more than 7%. stock ExxonMobil It rose by more than 4%.

Historically, geopolitical shocks do not have a lasting impact on stock markets. According to UBS, a review of the past 11 major geopolitical events found that the S&P 500 fell an average of 0.3% a week after the event and rose 7.7% 12 months later. In fact, the market has historically overlooked even major events such as the U.S. bombing of Iran, the company noted.

“Volatility is expected as headlines from Venezuela will dominate, but the overall market appears relatively unfazed by events so far,” said Jay Woods, chief market strategist at Freedom Capital Markets. “The quick resolution, with little threat of escalation, has calmed investor anxiety for now.”

This incident put other countries on alert as well. One analyst noted that Denmark was in “full crisis mode” after President Trump targeted Greenland following the attack. Russia’s reaction to Maduro’s ouster was cautious.

But the lackluster response to important geopolitical developments suggests investors do not expect the attacks to escalate further due to President Trump’s prior criticism of the conflicts in Iraq and Afghanistan.

In fact, Evercore ISI’s Matthew Aks agreed that the event is unlikely to move markets significantly, as he believes President Trump’s threat to take over the country is 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 long-term story.

“President Trump’s statement that the United States is running Venezuela is receiving a lot of attention, but we do not anticipate immediate large-scale military action,” Arcs said. “Rather, we interpret it as a colorful metaphor and negotiation tactic to pressure the remnants of the Maduro regime to voluntarily cede power.”

Instead, investors continue to focus on stock market fundamentals. Many people look to artificial intelligence, rising profits and loose monetary policy as reasons for optimism to start the new year. UBS said underexposed investors should invest any excess cash or bonds in stocks, but said gold should still be allocated.

“Developments in Venezuela could create volatility, particularly in the oil market, but we expect investors to remain focused on fundamentals,” said Ulrike Hoffmann-Burchardi, head of global equities at UBS Financial Services. “We expect MSCI All Country World earnings growth of nearly 10% in both 2026 and 2027, which will contribute to additional share price gains this year. “I will contribute,” he said.

“Against this backdrop, we rate global equities attractive,” she continued. “If investors are currently underallocated, I think they should reallocate any excess cash, bonds or high-yield credit assets into stocks.”