Dow Hits Record High after Maduro Capture
Maduro's capture appears to have helped the stock markets and particularly the energy sector this week.
Quick overview
- The Dow Jones Industrial Average reached a new high after the capture of Venezuelan President Nicolas Maduro by the Trump administration.
- Despite a slight decline on Tuesday, all major U.S. stock indices remain near record highs following a positive end-of-year rally.
- The transition in Venezuela's government has been smooth, defying expectations of increased market volatility typically associated with geopolitical events.
- Investors are now focusing on energy stocks, with notable gains from companies like Schlumberger, which received an upgraded rating.
The Dow Jones Industrial Average (DJIA) soared to a new high on Monday following the capture of Venezuelan President Nicolas Maduro by the Trump administration.
The Dow rose 1.23% Monday, or nearly 600 points, as President Trump called on trade partners to invest in Venezuela’s oil-rich resources. The U.S. plans to stay in the country until the government is running smoothly, but they have made it clear they are not occupying the South American nation.
The Dow fell 0.3% on Tuesday in early morning trading but still remains close to an all-time high. All three major U.S. stock indices are trading around their record highs this week after a minor end-of-year rally that positively impacted already elevated stock market levels.
No Bear-Trend Detected So Far
When there are major geopolitical events taking place, the stock market tends to become very volatile, especially in the following days. The effects of these major events tend to dissipate over time, but the short-term impact is usually severe.
That is not the case so far with the capture of Maduro and the change of government in Venezuela. Analysts and investors would expect the stock market to become bearish and experience increased volatility when there is a major shift in political power. The transition so far for the new government in Venezuela has been mostly smooth and well received, however.
Investors should note that the United States government has indicated it may make further political moves in Latin America, perhaps setting its sights on Cuba as the Trump administration works to make conditions more favorable for it and its people in the region. As well, China and Russia have spoken out against Trump’s move to arrest Maduro and replace him. Whether any of these warnings lead to geopolitical instability has yet to be seen, but for now, the region is settled and the stock market is healthy.
On Monday, global defense stocks rose, and over the weekend, it was AI-related tech stocks that performed well. Now, the focus is on energy stocks. There was a minor uptick from several key energy stocks like Haliburton (up 0.2%), Exxon Mobil (up 0.5%), and Chevron (up 0.8%). However, SLB (Schlumberger) rose 2.2% with Evercore ISI upgrading the oilfield company’s rating to “Outperform” from the previous “in Line” rating.
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