American stock markets survived the banking disaster and showed a serious gain in the first quarter. According to Reuters, some investors say the figures could come under pressure in the event of a widely expected recession.

The benchmark S&P 500 rose 7 percent in the first quarter ended Friday, recovering from a nearly 20 percent decline in 2022.

The Nasdaq Composite’s 16.8% jump in the first quarter was the biggest quarterly gain of 2020.

Cautious investors say the rise makes stocks more vulnerable to an economic downturn, also caused by turmoil in the banking sector after the collapse of Silicon Valley Bank this month.

Many point to stock values ​​that remain high by historical standards, while arguing that corporate earnings can go a long way in a recession.

The extent to which a possible recession has been factored in — and whether the economy will experience one — has been a point of contention on Wall Street.

Strong data since the start of the year has supported expectations that the US will suffer only a mild recession or avoid one altogether, despite several rate hikes by the Federal Reserve.

This month’s turmoil in the banking sector raised concerns again, as some analysts said the strain on lenders could weigh on the economy just as the Fed begins to tighten monetary policy.

This has forced investors to turn again to key metrics such as corporate earnings. While earnings estimates for the coming quarters are already pessimistic, some believe they could fall further if a recession hits.

S&P 500 earnings fell 5% in the first quarter from a year earlier, after a 3.9% drop in the second quarter was expected, according to data from Refinitiv. However, during a recession, incomes fall by an average of 24 percent a year, according to Ned Davis Research.

US companies will begin reporting first quarter results in the coming weeks.