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 that the attack and capture of leader Nicolas Maduro would not lead to a larger geopolitical conflict.

S&P 500 futures and Nasdaq 100 futures rose 0.3% and 0.8%, respectively, in premarket trading Monday. Futures tied to the Dow Jones Industrial Average were last up 35 points, or 0.1%.

The oil market rose modestly, although energy stocks helped lift the market as traders bet that a takeover of Venezuela, which has the world’s largest proven oil reserves, would benefit oil and gas companies. Stripwhich already has an established presence in the country, is up more than 7%. shares ExxonMobil It increased by over 4 percent.

Historically speaking, geopolitical shocks have had little lasting impact on the stock market. A review of the last 11 major geopolitical events showed that the S&P 500 index was on average just 0.3% lower a week after the event, but 7.7% higher 12 months later, according to UBS. The company stated that, in fact, markets have historically ignored even major developments such as the US bombing of Iran.

“While volatility is expected as Venezuela headlines dominate the landscape, overall the market appears relatively unaffected by events so far,” said Jay Woods, chief market strategist at Freedom Capital Markets. “A quick solution with very little threat of an increase has calmed investors’ uneasiness for now.”

The incident put other countries on high alert. One analyst said Denmark was in “full crisis mode” after Trump set his sights on Greenland following the attack. Russia had a cautious reaction to Maduro’s ouster.

But the weak response to a major geopolitical development suggests investors do not expect the offensive to escalate further, in part because of Trump’s previous criticism of conflicts in Iran and Afghanistan.

Indeed, Evercore ISI’s Matthew Aks agrees that this event will not move the market in a big way, as he views 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 improve the country’s infrastructure will be long-term.

Aks said, “Trump’s statement that the USA rules Venezuela attracts great attention, but we do not expect an immediate large-scale military intervention from the USA.” “Rather, we interpret this as a colorful metaphor and negotiating tactic aimed at maintaining pressure on the remnants of the Maduro regime to voluntarily cede power.”

Instead, investors continue to focus on stock market fundamentals. Many find artificial intelligence, earnings growth and easier monetary policy as reasons to start the new year optimistically. Investors who are not taking enough risk should put excess cash or bonds into stocks, but gold should remain an allocation, UBS said.

Ulrike Hoffmann-Buchardi, global head of equities at UBS Financial Services, wrote: “While developments in Venezuela are causing volatility, particularly in oil markets, we expect investors’ focus to remain on fundamentals. We forecast MSCI All Country World earnings growth of around 10% for both 2026 and 2027, which will contribute to further equity gains this year.”

“Against this backdrop, we rate global equities as Attractive,” he continued. “If investors are currently under-allocated, we believe they should reallocate excess cash, bonds or high-yield loan assets into stocks.”