All of the major indexes fell into bear market territory at various points this year with the Nasdaq Composite taking one of the bigger hits. It's still down almost 30% year to date.

The market has made some efforts to rally over the past two months, but with so much uncertainty in the economy, it is hard to know when the bull will finally return. Many Wall Street experts expect the bear market, or at the very least a correction, to stay with us well into 2023 as a recession looms.

Analysts at Bank of America (BAC -0.05%) said the S&P 500 could fall to 3,240 by April, which would be a roughly 18% decline from current levels, before climbing back to around 4,000 by the end of the year -- which is essentially where it is now.

So, with that in mind, one of the best places to be invested right now is in bank stocks, because they are cheap, should be able to manage a downturn, and will be strong coming out of any recessionary period. Here are two great options: Bank of America and JPMorgan Chase (JPM 0.06%).

2 big banks benefitting from higher interest rates

It may not look it by their returns, but both Bank of America and JPMorgan Chase have performed better than most in this market cycle. The primary reason is higher interest rates, which significantly boosted their interest income and offset losses from investment banking, asset management, and trading operations. Just look at the most recent quarter as an example.

JPMorgan Chase, the largest bank in the U.S., generated $17.6 billion in net interest income in the third quarter, up 34% year over year. It accounted for more than half of the company's $33.5 billion in revenue last quarter.

It was a similar situation for Bank of America, the country's second-largest bank. Bank of America generated $13.8 billion in net interest income last quarter, which was 24% more than it made in the third quarter of 2021. Also, it accounted for more than half of its $24.5 billion in total revenue for the quarter.

In both cases, net interest income drove the companies to overall year-over-year revenue gains. With interest rates not going down anytime soon, these two banks are strong bets to continue to generate high levels of interest income.

There are two caveats that investors should be mindful of, including loan activity. For both of these banks, loan activity remained robust, with loans increasing year over year. More loans mean more interest income. If there is a recession, it could impact loan growth, although in two recessionary quarters this year, loan balances still grew. The other caveat is the provisions made for credit losses, which rise when the economy sputters and eat into profits. While credit quality remained solid for both, it is something to monitor.

Why these stocks are buys right now

Not only are these the two largest banks, but they are also the most efficient, well-run, and well-capitalized of the major banks, so they are best equipped to handle economic stresses that could lead to a decrease in loan activity, deteriorating credit quality, or higher provisions for credit losses.

They have also had the best long-term returns of the major banks, as the chart shows. Over the past 10 years, JPMorgan Chase has posted an average annual return of 12.2%, while Bank of America has an average annual return of 12.1%.

C Chart

C data by YCharts

In addition, both of these stocks are trading at a discount. JPMorgan Chase has a forward price-to-earnings (P/E) ratio of 10.5, while Bank of America has a forward P/E of 9.6. It is another reason why now is an opportune time to get these two leading bank stocks.

Interest rates are going to stay high for a while, even as inflation comes down, so that should continue to benefit these stocks well into next year. But ultimately, bank stocks are cyclical, so when the economy and markets do start to emerge from this funk, bank stocks will be strong coming out of the recession and through periods of economic growth. And these are the two best choices to lead the way.