Bruce Helmer and Peg Webb

After a year filled with geopolitical tension, interest-rate speculation, and nonstop headlines, investors may be surprised by how 2025 ultimately turned out. Despite plenty of uncertainty, markets produced strong returns and offered several valuable lessons as we head into 2026.

Not the usual suspects

U.S. stocks logged their third straight year of double-digit gains in 2025, defying expectations that higher rates and economic headwinds would slow momentum. Just as important, gains were broader than in prior years. While artificial intelligence continued to dominate market narratives, performance spread across many sectors, signaling a healthier, more durable market environment.

International stocks also had a standout year. Emerging markets surged more than 30%, with developed markets outside the U.S. not far behind. A weaker U.S. dollar and easing global monetary policy helped fuel those gains, reminding investors of the value of maintaining global diversification.

Interest rates took center stage

Monetary policy remained a key driver of markets. After holding rates steady for much of the year, the Federal Reserve cut interest rates three times late in 2025, bringing its target range to roughly 3.5% to 3.75%. Those moves supported both equity and bond markets and shifted expectations toward additional easing ahead.

Economic data painted a mixed but stable picture. Unemployment ticked higher to about 4.6% by year-end, yet the labor market remained resilient. Jobless claims stayed relatively low, suggesting the economy may be cooling but not cracking.

Treasury yields declined toward year-end as investors anticipated further rate cuts in 2026, reflecting growing confidence that inflation pressures were easing.

Looking ahead: cautious optimism for 2026

As 2026 unfolds, our outlook remains constructive, but cautious. Markets appear to be pricing in roughly two additional Federal Reserve rate cuts this year, though the timing remains uncertain. Adding to the intrigue is a potential leadership change at the Fed mid-year. While that transition will attract attention, we have to remember that monetary policy decisions are made by a committee, not by a single individual. Still, a dovish Fed could cause the economy to run hotter than we might want for market stability.

Globally, growth expectations remain steady. The International Monetary Fund forecasts U.S. economic growth of about 2.4% this year, with global growth holding near 3.3%. Emerging economies are expected to outpace developed ones, continuing a trend that benefited investors in 2025.

Risks haven’t gone away

Geopolitical risks remain elevated. Ongoing conflicts in Ukraine and the Middle East, unrest in Iran, and ongoing energy-market disruptions continue to inject volatility. Trade policy also remains a wildcard, with sovereignty questions over Greenland, tariffs, and legal uncertainty still unresolved.

That said, many multinational companies have already adapted their supply chains and operations, helping to blunt the economic impact of trade tensions so far.

AI: from market darling to productivity test

Artificial intelligence remains one of the most influential forces in the market, but the conversation is evolving. With AI driving significant equity gains over the past two years, investors are increasingly focused on execution and productivity, not just market size and potential.

Market leadership has started to broaden beyond mega-cap technology stocks into areas like financials, cyclicals, and smaller companies. This serves as a useful reminder that leadership rotates, and diversification still matters.

What investors should take away

One notable shift is the changing relationship between stocks and bonds. Correlations have weakened, making diversification across asset classes more valuable than it has been in years.

Rather than reacting to headlines, investors may benefit from rebalancing portfolios, revisiting allocations, and staying focused on long-term goals. Markets will remain noisy. But disciplined, plan-driven investing continues to be one of the most reliable ways to navigate uncertainty.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Advisory services offered through Wealth Enhancement Advisory Services LLC, a registered investment adviser and affiliate of Wealth Enhancement Group.

 

A federal judge says she won’t halt the immigration enforcement surge in Minnesota and the Twin Cities as a lawsuit over it proceeds.

Judge Katherine M. Menendez on Saturday denied a preliminary injunction sought in a lawsuit filed this month by state Attorney General Keith Ellison and the mayors of Minneapolis and St. Paul.

It argued that the Department of Homeland Security is violating constitutional protections. The lawsuit sought a quick order to halt the enforcement action or limit its scope. Lawyers with the U.S. Department of Justice have called the lawsuit “legally frivolous.”

The ruling on the injunction focused on the argument by Minnesota officials that the federal government is violating the Constitution’s 10th Amendment, which limits the federal government’s powers to infringe on the sovereignty of states. In her ruling, the judge relied heavily on whether that argument was likely to ultimately succeed in court.

The federal government argued that the surge, dubbed Operation Metro Surge, is necessary in its effort to take criminal immigrants off the streets and because federal efforts have been hindered by state and local “sanctuary laws and policies.” State and local officials argued that the surge is retaliation after the federal government’s initial attempts to withhold federal funding to try to force immigration cooperation failed.

“Because there is evidence supporting both sides’ arguments as to motivation and the relative merits of each side’s competing positions are unclear, the Court is reluctant to find that the likelihood-of-success factor weighs sufficiently in favor of granting a preliminary injunction,” the judge said in the ruling.

U.S. Attorney General Pam Bondi took to social media Saturday to laud the ruling, calling it “another HUGE” legal win for the Justice Department on X.

Federal officers have fatally shot two people on the streets of Minneapolis: Renee Good on Jan. 7 and Alex Pretti on Jan. 24.

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Lindsey Vonn is sat out a World Cup super-G race Saturday after crashing and injuring her left knee a day earlier but remains on track for the Milan Cortina Olympics, her coach told The Associated Press.

“No, she is not racing (Saturday) but preparing for Cortina as usual,” Chris Knight, Vonn’s personal head coach, said in a text message to The AP.

Vonn then posted on Instagram, “Unfortunately, I won’t be able to race today,” adding, “Thank you for all of the love and support I have received. Means the world to me.”

“Doing my best right now,” Vonn concluded with praying hands and fingers-crossed emojis.

Vonn crashed in a downhill in Crans-Montana, Switzerland, on Friday and ended up in the safety nets. After skiing down to the bottom of the course, she was airlifted away for medical attention.

It still wasn’t clear what her injury was.

“I crashed today in the downhill race in Switzerland and injured my left knee. I am discussing the situation with my doctors and team and will continue to undergo further exams,” Vonn wrote on Instagram on Friday.

Vonn, a 41-year-old American whose skiing career began at Burnsville’s Buck Hill, is expected to be one of the biggest stars of the Winter Games, which open next Friday. Her first race comes two days later in the women’s downhill.

Saturday’s super-G was slated to be her final race before the Games.

MELBOURNE, Australia — Elena Rybakina finally won her second Grand Slam title with a victory over top-ranked Aryna Sabalenka at the Australian Open on Saturday, and it was something of a testament to quiet achievers.

After some tumult at the start of 2025, including the suspension of her coach, Rybakina finished off last year with a title at the WTA Finals in November. And now she has started the new year with a major championship.

Her low-key celebration was symbolic of her understated run through the tournament: a small fist pump, a quick embrace with Sabalenka, a handshake with the chair umpire, a smile, and a few hand claps on the strings of her racket and a wave to acknowledge the crowd.

It happened quickly after Rybakina closed with an ace to cap a third-set comeback and a 6-4, 4-6, 6-4 win over a regular rival who beat her in the final here in 2023.

“The heart rate was definitely beating too fast. Even maybe (my) face didn’t show, but inside it was a lot of emotions,” the 26-year-old Rybakina, who was born in Moscow but represents Kazakhstan, said of her calm and clinical finish.

She knew she had to capitalize quickly this time, after she admitted getting tight and needing almost a half-hour from her first match point to her match-winning point in a semifinal win over Jessica Pegula.

Three years ago, Rybakina won the first set of the Australian final but lost it in three.

This time, after breaking in the first game and taking the first set, she rallied after losing the second set and going down 3-0 in the third. She won five straight games to regain control.

“It gives me a kind of relief,” she said, “also, a lot of confidence for sure for the rest of the season.”

It was a second major title for fifth-seeded Rybakina, who won Wimbledon in 2022 and entered that Australian final three years ago as the only major winner in the contest.

While Sabalenka went on to win another three majors, including back-to-back triumphs in Australia and the 2024 and ’25 victories at the U.S. Open, Rybakina’s results dipped and she didn’t reach another major final until this tournament.

A win over Sabalenka at the season-ending WTA Finals has changed her career trajectory. She has the most match wins on tour since Wimbledon, and is now on a roll of 20 wins from 21 matches.

“Last year I didn’t start so well,” she said. “I qualified for the (WTA) Finals late. I just hope I can carry this momentum. Do a good job with the team and continue this way.”

Rybakina is 10-0 in her last 10 matches against Top 10 players, and she’ll return to No. 3 in the rankings.

Kazakhstan’s flag was unfurled on the court at Rod Laver Arena after Rybakina had paraded the trophy around and posed for photos with her team.

She paid tribute to her coach, Stefano Vukov, who spent time under suspension last year by the women’s tour. Vukov received a silver plate from the tournament organizers for being the champion’s coach.

“Of course I would like to thank my team,” she said. “Without you it wouldn’t have been possible. Really. We had a lot of things going on (last year). Thank you to all of you, and hopefully we can keep on going strong this year.

“It’s a win for all the team, all the people who support me,” she said. “I just hope that I can carry this moment throughout the whole season and keep on improving.”

For Sabalenka, it’s back-to-back losses in the final in Australia after going down in an upset last year to Madison Keys.

“Of course, I have regrets. When you lead 3-Love and then it felt like in few seconds it was 3-4, and I was down with a break — it was very fast,” she said. “Great tennis from her. Maybe not so smart for me.

“But as I say, today I’m a loser, maybe tomorrow I’m a winner. Hopefully I’ll be more of a winner this season than a loser. Hoping right now and praying.”