This month, our experts discuss how Federal Reserve tightening has historically affected the markets; whether European stocks might be worth a second look; and the news from the most recent Federal Open Market Committee (FOMC) meeting. We provide the supporting documentation for all claims summarized below in the linked articles.

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• Federal Reserve tightening has historically brought near-term volatility, but equities tended to often recover after early drawdowns.
• The pace matters: slow hiking cycles have historically produced milder market declines and stronger economic outcomes than fast cycles.
• A resilient labor market and firm coincident indicators support a gradual Fed approach, with volatility potentially creating opportunities for disciplined investors.

• Global growth has picked up and Europe's market is cyclically oriented, with 62% of the MSCI Europe Index in economically sensitive cyclical sectors as of August 31, 2026.
• European earnings have rebounded and broadened: STOXX Europe 600 earnings grew 23.9% in the second quarter of 2026, and 2026-27 estimates are being revised higher according to Bloomberg data.
• Valuations are less demanding than the U.S., and Europe's total-yield edge is widening as artificial intelligence (AI) capital spending drains U.S. hyperscaler free cash flow. Hyperscalers are companies that design, own, and operate a large portion of data center networks to provide cloud computing at scale.
• Europe may add diversification to a portfolio of U.S. equities, with a lower concentration in the top 10 companies in the MSCI Europe Index relative to the top 10 stocks in the S&P 500 index, and a falling correlation to U.S. stocks.
• But risks could include slower global growth, a tightening of liquidity conditions, a stronger U.S. dollar, geopolitical tensions, energy-price shocks, and structural challenges within the eurozone.

• Fed policymakers unanimously voted to raise rates 25 basis points, the first hike since 2023, at the September FOMC meeting.
• Major indexes initially rose on the news, while Treasury yields flattened with the 10-year Treasury yield near 19-year highs. But after Fed Chairman Kevin Warsh spoke at his press conference, major indexes surrendered earlier gains and then plunged with half an hour left in the session.
• In addition, 16 members of the FOMC expect at least one more rate hike this year, according to the Fed's Summary of Economic Projections, also known as the "dot plot."
• This isn't likely to be "one-and-done" for hikes, as the Fed rarely hikes or cuts a single time, but it likely also isn't the start of an extended hiking cycle.