Wall Street Eyes 2026 After Best Run Since 2009; Risks Emerge

• Wall Street experienced its strongest cross-asset performance since 2009 in 2025, driven by AI enthusiasm, easing inflation, and supportive central banks.
• Stocks, bonds, credit, and commodities all saw significant gains, with global equities up 23% and US stocks 18%.
• The unusual cross-asset synchrony created a "diversification mirage," making portfolios appear safer than they were and narrowing the margin for error.
• Despite broad optimism for 2026, concerns exist about the sustainability of valuation expansion, particularly in AI and nuclear stocks.
• A key risk for the new year is the potential return of inflation, especially from rising energy prices, which could reverse recent progress.

Why It Matters: Wall Street's record 2025 run sets high expectations for 2026, but sustainability and inflation risks loom.