The S&P 500 index rose 1.4% last week, recovering some but not all of the previous week's tumble, as some investors saw the recent stock market declines as presenting buying opportunities while a show of support among big banks for First Republic Bank (FRC) also provided some relief.

The market benchmark ended Friday's session up 2% for the year-to-date but down 1.3% for March to date.

The S&P 500 slid 4.5% last week amid the collapse of Silicon Valley Bank. Since then, Signature Bank also collapsed, and financial stocks tumbled as investors worried about what other banks might be next. Concerns ramped up last week over First Republic Bank, but on Thursday, a group of 11 banks announced $30 billion in deposits into First Republic Bank in a show of support that helped ease fears a bit. Still, investors remain wary.

The communication services sector had the largest percentage increase last week, climbing 6.9%, followed by a 5.7% rise in technology and a 3.9% increase in utilities. Other sectors in positive territory for the week included consumer discretionary, health care, consumer staples and real estate.

The energy sector led to the downside, falling 7%, followed by a 6.1% drop in the financial sector. The materials sector also was in the red, down 3.5%, followed by a 2.5% decline in industrials.

Next week's economic calendar will be light with no major reports expected on Monday and only February existing home sales anticipated on Tuesday. However, the market will be heavily focused on a two-day Federal Open Market Committee meeting that concludes on Wednesday with a rate decision.

Source: https://ycharts.com/

Here’s the latest 2023 outlook from JP Morgan Asset Management

• Near-term recession is too close to call. However, lower inflation and slower growth over the next few years seem very likely.

• After a dreadful year, return prospects for bonds in 2023 look much better as the Federal Reserve concludes its rate hiking cycle. Investors can take advantage of higher yields in short-dated bonds while adding duration as a hedge against market volatility and maintaining a high quality bias in credit.

• Globally, 2023 should see substantial (albeit incomplete) normalization in inflation levels, a pause in central bank increases and a hangover for the real economy from last year’s inflation surge and aggressive rate hikes. China may be an exception to the rule of global deceleration, with a slow (but bumpy) shift away from “zero COVID”.

• U.S. equity returns will be driven by earnings against a backdrop characterized by elevated market volatility. In this environment, companies with pricing power and stable cash flows – that are trading at reasonable valuations – are most attractive.

• While risks around the international growth outlook are high for 2023, they are also much better reflected in equity valuations (and currencies) – and “less bad” news can be enough to fuel a powerful rebound once the worst is priced into earnings expectations.

• Alternatives have benefited from an environment of easy money for the past decade – a trend that has come to an end. The new combination of higher rates and demand for capital will allow for more differentiation between winners and losers.

• ESG was confronted with headwinds in 2022, yet commitments from policymakers this year could fuel investments in sustainable technology and infrastructure for the next decade.

• Despite uncertainty on the horizon, significant valuation imbalances across markets mean there is more upside potential than downside risk in investing today

Source:  JP Morgan Asset Management

As always, let me know what questions you have.