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The Earnings360 Team
Additional Reading from MarketBeat 3 Smart Defensive Stocks for an Uneasy MarketWritten by Chris Markoch. Published 11/18/2025. 
Key Points - Despite new market highs, recession risks remain elevated due to weakening consumer credit and signs of job market stress.
- Procter & Gamble and Johnson & Johnson offer stable dividends, strong balance sheets, and catalysts that could provide upside in a downturn.
- A rotation away from AI and into Dow components could make the DIA ETF a compelling defensive play for 2025.
At one point in early November, the Dow Jones Industrial Average (DJIA) briefly topped 48,000 for the first time ever. At different times in 2025, the NASDAQ and S&P 500 have reached new all-time highs. Despite sharp price swings, it has been a strong year to own stocks. Yet many economists, analysts, and investors remain uneasy. The market appears priced for perfection—recession risks, by contrast, look underpriced. Twenty-six years ago, I warned readers about a major economic shift — and while I thought it was a once-in-a-lifetime moment, the same pattern is emerging again, only larger and faster. The forces reshaping our financial system today mirror the transition that rewarded investors who moved out of fading legacy names and into the companies driving the next era of growth, and I'm issuing a new set of recommendations to help you stay ahead of what's already unfolding. Get my full update and recommendations here Even with broad gains, skepticism persists. The Magnificent 7 trade may have cooled, but the market is still being lifted by a narrow group of names, largely tied to the AI boom. The K-Shaped Economy Concern Current economic commentary focuses on a K-shaped recovery. Higher-income consumers are navigating inflation of around 3%—still above the Federal Reserve's informal 2% target but manageable for affluent households. Lower-income consumers, however, have been under pressure for several years. Rising credit defaults, delinquent auto loans, and a recent uptick in foreclosures suggest this problem is worsening. The labor market, previously the economy's strongest pillar, is beginning to show signs of strain as well. JPMorgan Chase & Co. (NYSE: JPM) recently lowered its estimated probability of a recession from 60% to 40% after trade tensions eased. That reduction helps, but a recession remains a meaningful risk. Market Breadth Remains Narrow as Investors Chase Mega-Caps Data from Charles Schwab show the percentage of S&P 500, NASDAQ, and Russell 2000 stocks trading above their 200-day moving average is only slightly above 50%. That's historically low market breadth and adds to investor concern. This isn't a replay of 2021, when investors poured money into unprofitable SPACs chasing outsized returns. Today's concentration comes mostly from mega-cap companies that often have substantial cash on the balance sheet. Still, many investors worry some of these names are overvalued. So what should investors do? Below are three ideas that offer the potential for asymmetric returns in an uneasy market. Procter & Gamble Has More Than a Dividend to Like Procter & Gamble Co. (NYSE: PG) is a member of the exclusive Dividend Kings club, having raised its dividend for at least 50 consecutive years—70 years in PG's case. That track record makes it a staple for many income-oriented portfolios. The 2.8% dividend yield could look more attractive if interest rates decline. Additionally, the $171.53 price target implies roughly 17% upside for the stock in 2025. It's still unclear how PG's proposed acquisition of Kenvue (NYSE: KVUE) will affect earnings. If the deal closes and Kenvue's Tylenol-related issues subside, PG could see modest EPS dilution in the first year. Over time, however, synergies between the companies would likely help reverse that dilution and support EPS growth. Johnson & Johnson Doubles Down on Medtech and Oncology Growth Johnson & Johnson (NYSE: JNJ) spun off Kenvue in 2023 to focus on its medtech and pharmaceutical franchises. Its recent $3.5 billion acquisition of Halda Therapeutics illustrates that strategy. The all-cash deal gives JNJ access to Halda's clinical-stage HLD-0915 drug candidate, a once-daily oral prostate cancer medication that has received fast-track designation from the U.S. Food & Drug Administration. This is a material addition to JNJ's oncology pipeline and should make the stock more attractive to growth-oriented investors. The DIA ETF Could Benefit From a Flight to Safety Over the past five years, many investors have adopted a passive "SPY and chill" approach by investing in the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). SPY may still be a reasonable holding, but with potential AI-driven excesses, investors might also consider the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA). If worries about an AI bubble intensify, we could see a rotation into the Dow 30 constituents—companies that tend to be more diversified and defensive. That rotation would make DIA a good asymmetric way to capture a flight-to-safety trade. As of this writing, DIA has about 37% institutional ownership, but it has seen net buying in seven of the last eight quarters, suggesting institutions may be building a hedge against a potential tech slowdown.
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