Stocks rose on Monday even after the U.S.' attack on Venezuela and capture of leader Nicolas Maduro as crude oil prices saw gains and investors bet the action would not lead to bigger geopolitical conflicts that upset markets.
The Dow Jones Industrial Average gained 594.79 points, or 1.23%, to close at 48,977.18. The 30-stock index also hit a new all-time high in the session. The S&P 500 advanced 0.64% and ended at 6,902.05. The Nasdaq Composite added 0.69%, settling at 23,395.82.
Energy stocks led the gains on the notion the companies would benefit from rebuilding Venezuela's oil infrastructure. Chevron surged 5.1% and was seen as the biggest beneficiary because of its current presence in Venezuela, which has the largest proven oil reserves in the world. Exxon Mobil added 2.2%. Shares of oilfield services companies that could aid the Venezuela energy rebuild like Halliburton and SLB moved higher by 7.8% and nearly 9%, respectively. The State Street Energy Select Sector ETF (XLE) increased almost 3%.
"Maybe in the short term, it'll boost the price of oil because the question is surrounding the supply and delivery of oil," Sam Stovall, chief investment strategist at CFRA Research, said to CNBC. "Longer term, it could end up being an improvement because Venezuela represents only 1% of the world's oil supply, and they've been getting worse and worse over the years. Their infrastructure needs to be improved, and possibly that is something that the U.S. can help with."
Even with the bullish equities reaction, traders also added exposure to gold. Futures contracts tied to the precious metal rose 2.8% for their best day since Oct. 20. Bitcoin traded above $94,000. Financial stocks were higher as well, as those on Wall Street were betting on a strong U.S. economy this year. Shares of big bank Goldman Sachs and regional bank U.S. Bancorp jumped 3.7% and 2.9%, respectively.
"The market is basically saying, 'We're going to focus on putting money back to work after doing tax-loss harvesting, doing portfolio realignments in the end of 2025, and then buying back into stocks early in 2026,'" Stovall continued. "Investors are still focusing on what the Fed is likely to do, what corporate profits will do. So far, it remains a risk-on environment."
Following the attack and capture by the U.S. military, Maduro and his wife, Cilia Flores, were flown to New York, where they were charged with narco-terrorism conspiracy and other crimes. Drug trafficking, according to the indictment, "has enriched and entrenched Venezuela's political and military elite." President Donald Trump said Saturday in a news conference that the U.S. would "run" Venezuela "until such time as we can do a safe, proper and judicious transition."
"This is a significant geopolitical event though unlikely to be a major near-term market-mover," wrote Matthew Aks, policy analyst with Evercore ISI, in a note. "For now, investors are left to navigate a now-familiar landscape of Trump's likely purposeful ambiguity around his next steps."
"Our instinct is that Trump is generally not interested in full-scale boots-on-the-ground regime change like the Iraq and Afghanistan wars he has long criticized. However, Trump's statements today leave open the possibility this won't quite be a one-and-done like the Iran nuclear strike last year," Aks added.
Shares of defense giants General Dynamics and Lockheed Martin received a bit of a boost, moving higher by 3.5% and 2.9%, respectively, with Trump's latest action showing quick military strikes would be a key part of his policy for dealing with geopolitical issues that arise.
