While the Fed was the major storyline impacting the markets, many other notable events transpired in the third quarter. Tensions escalated perilously in the Middle East and Ukraine conducted a surprise attack inside Russia for the first time since that war began. At home, President Biden abandoned his bid for a second term while former President Trump survived two assassination attempts. In the end, however, investors remained resilient.

That mettle will be tested once again in the fourth quarter, as no period in recent memory has featured as many potentially market-moving scenarios. Earnings reports will be closely scrutinized for clues about Corporate America’s growth and capital spending plans for 2025. Economic data—and particularly jobs data—will be monitored for signs indicating whether the U.S. economy is heading for a recession. While it is a near certainty that the Fed will continue to ease rates in the fourth quarter, the magnitude of cuts is unknown. Most expect two more quarter-point cuts. Should economic growth weaken, the Fed could opt for a more aggressive path.

Overseas, the Chinese economy is weak and the government is aggressively intervening, while Mideast tensions could lead to a full-scale war. Domestically, the November presidential election will be of keen interest to all market participants.

We believe the Riverbridge portfolios are well positioned for this period of uncertainty. We seek companies that are less economically sensitive and not as susceptible to macro events. In weakening economic environments, our companies have historically demonstrated the ability to strengthen their relative market positions and we remain confident that our internally financed portfolio companies will traverse this uncertain landscape well. We are also encouraged that the market is beginning to broaden and recognize the opportunities within small and mid-cap stocks. As always, timing the market is futile. Investing for the long-term in companies with enduring earnings power remains key.