Unlike 2025, we didn’t have wait until April for geopolitical bombshells. The escalating US pressure on Venezuelan President Maduro reached its crescendo over the weekend when US forces captured and extracted him to the US to face indictment on nacro-terrorism, drug conspiracy and weapons charges. As we’ve seen over and over again (see, for example, last year’s bombing of Iranian nuclear facilities) US equities are showing an ability to move higher despite global turmoil. Stocks are starting the first full week of trading in 2026 on a strong note, with major indexes up ~1-2%. The S&P 500 is actually lagging the equal-weight index as well as the Mid and Small cap indexes.

It’s an interesting tape in the midst of the latest emerging geopolitical events, with cyclicals leading and defensive sectors lagging. Energy is a standout as the sector advances on the geopolitical news and possible US beneficiaries in Venezuela oil investment. Financials are strong across-the-board, with the major banks all up ~3%. Consumer Discretionary is also trading well. Amazon is helping there, up ~3% with some news out on a rollout of a new Alexa AI service. News flow around the Consumer Electronics Show could also be driving interest. Tesla is another driver, pun intended, up 4%, with a WSJ article over the weekend focusing on the company’s Optimus robotics efforts. Restaurant and travel names are also trading higher. Defensive sectors meanwhile are lagging. Utilities are down 2% despite a drop in yields. Healthcare is also down but its concentrated in major biopharma names, which generally outperformed last year. Staples are slightly lower on food and beverage weakness, while the big retailers trade higher.

Treasury yields are down 3-5bp across the curve. The US Dollar Index meanwhile is well off its highs of the day, now slightly negative after the Euro and Pound reversed earlier weakness. We’ll get the final Services PMI and API crude inventories on another light day tomorrow. Richmond Fed President Barkin will speak before the market.