On January 3, 2026, the United States executed Operation Absolute Resolve, a large-scale military strike on Venezuela that resulted in the capture of President Nicolás Maduro and his wife, Cilia Flores. The operation involved more than 150 aircraft launching from approximately 20 bases alongside special operations forces, and represents the most significant U.S. military intervention in Latin America since the 1989 invasion of Panama.
This measured response in the markets underscores a recurring market dynamic: dramatic headlines do not always translate into lasting market volatility. Instead, investors appeared focused on underlying economic fundamentals, potential longer-term energy implications, and the broader cyclical outlook rather than reacting to the immediacy of the news.
During the press conference following the operation, President Trump based the strike on Venezuela’s involvement in drug trafficking as well as historical claims that Venezuela stole U.S. oil companies’ assets when it nationalized its oil industry in 1976 and 2007. In addition, Trump mentioned that the U.S. is reasserting the 1823 Monroe Doctrine, now being referred to as the “Donroe Doctrine”, which stated among other things that any [International] intervention in the Western Hemisphere would be regarded as “dangerous to our peace and safety,” essentially asserting U.S. domination of the Western Hemisphere.
Venezuela holds about 17% of world oil reserves but produces less than 1 million barrels per day or less than 1% of global crude production. Production has declined over recent years due to deferred maintenance and sanctions against the country. While this was a dramatic political act, the market reaction has been relatively muted outside some areas of the energy sector and defense stocks.
Equity markets overall reacted positively with the S&P 500 rising 0.64%. and the small cap Russell 2000 rising 1.59%. Small caps outperformed perhaps due to lower oil prices providing a cyclical boost that could help broaden economic activity beyond the Magnificent 7 and large cap companies.
Oil prices were relatively muted, only rising about 1.7% on the day. Major oil companies rose more significantly during premarket trading but closed less enthusiastically with Chevron (CVX) up over 5% and Exxon (XOM) up a little over 2%. Refiners who would potentially benefit (a matter of some debate) from lower hhcost Venezuelan crude were up more substantially with Valero (VLO) up 9% and Phillips 66 (PSX) up 7%.
Interestingly, the nuclear power unit manufacturers like Oklo (OKLO) and NuScale (SMR) were up a surprising 15%, while the nuclear power generators like Constellation Energy (CEG) and American Electric Power (AEP) were down a somewhat expected -1.5% to -3%. International Markets also outperformed large cap U.S. stocks. The MSCI All Country World Index Ex-U.S. was up 1% and MSCI Emerging Markets Index was up 1.1%. The decline in the trade-weighted Dollar Index today provided a boost to international returns but was off a modest 0.14%. European defense manufacturers like Rolls Royce and Rheinmetall understandably were up strongly due to the U.S. action, but the broader rise in international markets could reflect the potential for lower longer-term oil prices and a stronger cyclical backdrop as a result.
Precious metals like gold and silver advanced 2% and 3% respectively, reflecting an increased geopolitical risk premium.
The capture of Maduro is a dramatic and potentially consequential political event. However, the muted market reaction appears to be rational given the potential for short-term dislocations in oil markets but a longer-term potential cyclical boost to the economy from lower oil prices.
As always, remaining invested and focused on the long-term nature of a well-designed investment strategy is more impactful than reacting to near-term events.
For broader context on the market forces shaping 2026, see our December 2025 Market Recap.
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