Markets Pause Rally as Geopolitical Risks Rise and Investors Await Key U.S. Data

Index Update:  The strong AI-driven gains that kicked off 2026 appeared to be cooling as investors turned cautious ahead of key U.S. labor data and amid geopolitical uncertainty in Venezuela. Premarket trading showed a mixed picture for megacap tech names, with modest rises in Nvidia, Alphabet and Broadcom, while Microsoft and Meta were little changed. Apple, Amazon and Tesla edged lower.

Market Movers:  On Monday, the top gainers were Momentus Inc. (+53.66%), followed by Intelligent Bio Solutions Inc. (+39.42%). On the contrary, Zenas BioPharma, Inc. (-51.86%), and Society Pass Incorporated (-30.62%) declined the most the same day.

Commodities Update:  WTI traded near $58.2 and Brent near $61.7 a barrel on Tuesday after both rose about 1.7% in a volatile prior session, as markets weighed the impact of U.S. actions in Venezuela. Despite Venezuela’s vast oil reserves, years of underinvestment mean its output is less than 1% of global supply, so near-term disruption is seen as having limited price impact. Analysts said production could recover over time if political stability and investment return, potentially adding to an already well-supplied market. Meanwhile, Saudi Arabia cut crude prices to Asia for a third straight month, and OPEC+ kept its plan to pause output hikes in Q1 amid concerns over excess supply and weak demand. Gold extended gains above $4,460 per ounce and silver climbed toward record highs near $79 as investors sought safe-haven assets amid escalating geopolitical risk following the U.S. military action in Venezuela and the capture of President Nicolás Maduro. Safe-haven demand was reinforced by softer U.S. manufacturing data and cautious Fed commentary ahead of key labor reports this week. Meanwhile, copper surged to fresh record highs above $6 per pound on expectations of tightening global supply, potential U.S. tariffs on refined metals, and strong demand tied to energy transition projects and infrastructure investment, with supportive policy and liquidity conditions in China adding to the bullish outlook.

Macro Updates:  The US Logistics Manager’s Index fell to 54.2 in December 2025, its weakest expansion since April 2024, driven mainly by sharp declines in inventory and warehousing activity. Inventory levels saw an “extreme contraction” as companies rapidly cleared excess holiday stock, easing inventory costs while boosting warehousing capacity and pushing utilization to a record low. As goods were moved downstream toward consumers, transportation dynamics tightened again, with capacity slipping back into contraction and prices rising.

Dollar Commentary:  The dollar index stabilized near 98.4 on Tuesday after a choppy session driven by geopolitical tensions and shifting Fed expectations. The greenback briefly strengthened following the U.S. attack on Venezuela but later eased as escalation fears subsided. Weaker ISM manufacturing data and comments from Fed official Neel Kashkari highlighting rising unemployment risks added to expectations of further rate cuts this year, though markets still largely expect no policy change at the Fed’s upcoming meeting. Focus now turns to key U.S. labor data, including Friday’s jobs report.

Futures Update:  U.S. stock futures were mostly flat early Tuesday after Wall Street ended higher, helped by gains in energy stocks following U.S. actions in Venezuela and the capture of President Nicolás Maduro. Analysts noted that while Venezuela could eventually become a key global oil producer, doing so would take significant time and investment. S&P 500 futures were steady at 6,940.75, Nasdaq 100 futures edged up 17 points to 25,594.25, and Dow futures slipped 85 points to 49,142.

Stocks generally moved higher during Monday’s trading, bouncing back from the decline seen during the holiday-affected previous week. All major indices gained ground, with the Dow hitting a new record closing high. The S&P 500 increased by 43.56 points, or 0.64%, closing at 6,902.04. From a technical standpoint, the index is maintaining its key support area and has edged higher. However, considering yesterday’s price action, the market could experience choppy trading in the upcoming session. The 14-day Relative Strength Index (RSI) remains near the midpoint, indicating that some buying momentum may develop soon. The key support level is around 6,844—an important level that could trigger a rebound—while resistance is expected near 6,966.