- US equities maintain a solid uptrend with the Dow Jones hitting record one-day gains.
- Defense and energy stocks surged amid the situation in Venezuela.
- Investors remain cautious, as the AI bubble could lead to significant profit-taking.
US equities started the new week on a solid footing, following a strong rally during regular trading that sent major benchmarks to new highs, with stock futures barely changing on Monday night. Following Monday’s robust gains, futures linked to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 also declined slightly, indicating a pause rather than a reversal.
The Dow experienced one of its largest one-day gains in recent months during the cash session, rising by nearly 600 points to close at a record high. Growth stocks, such as Tesla, Amazon, and Palantir, contributed to the S&P 500 and Nasdaq Composite recording strong gains.
The demonstration came after President Donald Trump publicly urged American energy companies to assist in rebuilding Venezuela’s oil industry, as well as the United States’ capture and removal of Venezuelan President Nicolas Maduro over the weekend. As the year gets underway, markets seem to view the development as a positive catalyst rather than a cause of instability, indicating a wider willingness among investors to maintain risk exposure.
The advance was led by defense and energy stocks. Benefiting from its current presence in Venezuela, Chevron’s stock price increased by more than 5%. Exxon Mobil, ConocoPhillips, and oilfield services companies like Halliburton, SLB, and Baker Hughes also saw significant increases. Expectations of higher geopolitical spending helped defense contractors like General Dynamics and Lockheed Martin. As investors conjectured about better access to heavy crude supplies appropriate for US Gulf Coast infrastructure, refiners such as Valero and Marathon Petroleum surged.
It’s interesting to note that significant gains in conventional safe havens coincided with the equity rally. Silver and copper both increased, with copper setting a new record, while gold had its best session since October. Although traders acknowledged that there are still significant logistical and political obstacles to overcome before production can recover substantially, oil prices remained volatile. Still, they ended higher, reflecting optimism about future Venezuelan output.
Beneath the headlines, caution is beginning to emerge despite the positive tone. Ray Dalio, a seasoned hedge fund manager, has cautioned that the artificial intelligence-driven surge in US technology stocks is exhibiting early warning signs of a bubble, noting that US equities have underperformed gold and their international counterparts over the past year. His remarks align with a growing Wall Street discussion about stretched valuations, particularly in AI-related names that have contributed significantly to the market’s recent gains.
Investors seem prepared to strike a balance between selectivity and optimism in the future. Strong momentum, expectations of favorable monetary conditions, and specific opportunities in energy, defense, and rare earth minerals continue to support sentiment, even as geopolitical risks and policy uncertainty remain in the background. US stocks are still firmly in an uptrend for the time being, but the market’s inconsistent reaction raises the possibility that a more complex and selective phase is emerging.
