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The Earnings360 Team
For Your Education and Enjoyment 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 also made new all-time highs (ATHs). 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—while recession risks are not adequately priced in. Years before it became a household name, Shopify showed an early momentum pattern that experienced traders used to catch a 120% move — and that same repeatable signal has just appeared on a new small-cap ticker that hasn't hit the mainstream yet. Our free Momentum Trading Report breaks down how to spot these stealth setups and reveals which names are flashing right now. Get early access to the free Momentum Trading Report here Even with broad gains, skepticism persists. The Magnificent 7 trade may have cooled off, but the market is clearly being lifted by a narrow group of names, mostly tied to the AI boom. The K-Shaped Economy Concern Current economic commentary focuses on a K-shaped recovery. Higher-income consumers are largely navigating inflation of around 3%—still above the Federal Reserve's informal 2% target but manageable for more affluent households. By contrast, lower-income consumers have been under pressure for several years. Evidence in rising credit defaults, delinquent auto loans, and a recent uptick in foreclosures suggests this problem is worsening. The labor market had been the economy's strongest pillar, but even that is beginning to show signs of strain. JPMorgan Chase & Co. (NYSE: JPM) recently lowered its estimate of the probability of a recession from 60% to 40% due to a recent de-escalation of trade tensions. But that remains a meaningful risk. Market Breadth Remains Narrow as Investors Chase Mega-Caps Recent data from Charles Schwab shows the percentage of S&P 500, NASDAQ, and Russell 2000 stocks trading above their 200-day moving averages was slightly above 50%. That's historically low market breadth, which is adding to investors' concerns. This isn't a redux of 2021, when investors piled into unprofitable SPACs hoping to strike it rich. In this cycle, the froth largely comes from mega-cap stocks with healthy cash balances. Still, many investors feel several of these names are overvalued. So what's an investor to do? Below are three stocks and an ETF 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 part of the exclusive Dividend Kings club, having increased its dividend for at least 50 consecutive years—70 years in PG's case—making it a staple for many income-oriented investors. The 2.8% dividend yield could look more attractive if rates fall. Additionally, 2025 brings potential growth—the $171.53 price target implies roughly 17% upside from current levels. It's unclear how the company's proposed acquisition of Kenvue (NYSE: KVUE) would affect earnings. If the deal goes through and Tylenol-related concerns subside, investors should expect a small earnings-per-share (EPS) dilution in the first year. Over time, however, that dilution would likely reverse as cost synergies between the companies bolster EPS. Johnson & Johnson Doubles Down on Medtech and Oncology Growth The next company on this list is Johnson & Johnson (NYSE: JNJ), which spun off Kenvue in 2023 to focus more on medtech and pharmaceuticals. Its recent $3.5 billion acquisition of Halda Therapeutics is an example of that strategy in action. The all-cash deal gives JNJ access to the clinical-stage company's HLD-0915 drug candidate, a once-daily oral therapy for prostate cancer that has received fast-track designation from the U.S. Food & Drug Administration (FDA). This addition meaningfully strengthens JNJ's oncology pipeline and should make the stock more appealing to growth-oriented investors. The DIA ETF Could Benefit From a Flight to Safety Over the past five years, many investors embraced a passive "SPY and chill" approach, allocating broadly to the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). SPY may still be a sensible holding, but with potential AI-driven overexuberance, it may be worth considering the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) as a defensive alternative. If concern over an AI bubble intensifies, investors are likely to rotate into the large, diversified names that make up the Dow 30—benefitting DIA and offering a potential asymmetric payoff. As of this writing, DIA has only about 37% institutional ownership, but it has seen more buying than selling in seven of the last eight quarters, suggesting institutions may be quietly building a hedge against a potential slowdown in the tech trade.
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