U.S. stocks continued their upward trajectory in early Monday trading, with the Dow Jones Industrial Average climbing 1.2%. The market is closely monitoring developments in international geopolitics following U.S. military action against Venezuela, which resulted in the capture of the country's leader, Nicolás Maduro. Crude oil prices showed a muted reaction, as investors bet that the operation would not trigger a larger, market-disrupting geopolitical conflict.
The Dow Jones rose by 587.83 points, or 1.21%, to 48,970.22; the Nasdaq Composite gained 176.89 points, or 0.76%, to 23,412.52; and the S&P 500 increased by 43.59 points, or 0.64%, to 6,902.06. Energy stocks led the gains in early trading, as the market anticipated that certain related energy companies would benefit from the reconstruction of Venezuela's oil infrastructure. Prices for both gold and Bitcoin also advanced. Chevron rose 2.6%, viewed as the biggest potential beneficiary due to its existing operations in Venezuela, which holds the world's largest proven oil reserves. ExxonMobil gained approximately 0.5%. Shares of oilfield services companies Halliburton and Schlumberger surged, on the widespread belief that these firms are well-positioned to participate in the rebuilding of Venezuela's energy infrastructure. The Energy Select Sector SPDR Fund (XLE) posted significant gains. Geopolitical relations became the focal point for U.S. markets on Monday. Tensions escalated sharply over the weekend after the U.S. military launched a surprise operation leading to the capture of Maduro. In a press conference on Saturday, U.S. President Donald Trump stated that America would "take charge" of Venezuela "until we can achieve a safe, proper, and prudent transition." Reports emerged on Sunday suggesting that U.S. Secretary of State Marco Rubio would be appointed to the role of so-called "Governor of Venezuela." According to officials familiar with the matter, Rubio was a central planner in the raid on Venezuela that occurred on the 3rd, and Trump is counting on him to assist in "managing" the country, overseeing the allocation of its oil assets, and facilitating the "formation of a new government." A senior U.S. official stated that in the "Governor of Venezuela" position, Rubio would be responsible for a complex array of policy decisions encompassing energy, elections, sanctions, and security for the country, noting that "the task before him is extremely arduous." The official indicated that Rubio would play a "critical role" in policy formulation as the Trump administration attempts to stabilize the situation in Venezuela. Evercore ISI policy analyst Matthew Aks wrote in a report, "This is a significant geopolitical event, but it is unlikely to become a primary market driver in the short term. For now, investors are faced with a now-familiar scenario—Trump deliberately maintaining ambiguity about his next steps." He added, "Our intuition is that Trump is generally not enthusiastic about regime change involving large-scale ground troop deployments, similar to the Iraq and Afghanistan wars he has long criticized. However, Trump's remarks today leave open the possibility that this operation may not be a 'one-and-done, mission accomplished' event like last year's strike on Iranian nuclear facilities." Shares of defense giants General Dynamics and Lockheed Martin each rose about 1%, as Trump's action signaled that swift military strikes would be a key component of his policy for addressing sudden geopolitical problems. Despite the bullish reaction in equities, traders hedged their positions by increasing exposure to gold. Futures contracts linked to the precious metal surged 2.4%. The price of Bitcoin recovered to above $93,000. Wall Street had just experienced a mixed session. Last Friday, the first trading day of the year, the S&P 500 and the Dow closed higher, while the Nasdaq Composite finished slightly lower, just below the flatline. This week, traders will focus on the December non-farm payrolls report due on Friday. Economists surveyed by Dow Jones expect the U.S. economy to have added 54,000 jobs last month.
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