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Additional Reading from MarketBeat Media 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 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 solid year to own stocks. Yet many economists, analysts, and investors remain uneasy. The market appears priced for perfection—but recession risks are not fully reflected in prices. Even with broad gains, skepticism persists. The Magnificent 7 trade may have cooled, but the market is being lifted by a narrow group of names, largely tied to the AI boom. The K-Shaped Economy Concern Current economic commentary is focused on a K-shaped recovery. Higher-income consumers are navigating inflation 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. There's growing evidence in rising credit defaults, delinquent auto loans, and a recent uptick in foreclosures, suggesting this problem is worsening. The labor market, once the economy's strongest pillar, is also beginning to show signs of strain. JPMorgan Chase & Co. (NYSE: JPM) recently revised its estimation of recession probability from 60% to 40%, citing a de-escalation in trade tensions. That still represents 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 average was slightly above 50%. That level of market breadth is historically low and adds to investor concern. This isn't a redux of 2021, when investors piled into unprofitable SPACs hoping for quick gains. Today's froth is concentrated in mega-cap names that often have substantial cash on their balance sheets—but many investors worry these stocks are overvalued. So what's an investor to do? Below are three stocks and ETFs that offer the potential for asymmetric returns in this 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 increased its dividend for at least 50 consecutive years—70 years in PG's case—which makes it a staple for income-oriented portfolios. Its current 2.8% dividend yield could look more attractive if interest rates fall. Moreover, the $171.53 price target implies roughly 17% upside in 2025. It's unclear how the company's proposed acquisition of Kenvue (NYSE: KVUE) would affect near-term earnings. If the deal goes through and headwinds around Tylenol subside, there likely would be modest EPS dilution in the first year, followed by potential EPS accretion from cost synergies thereafter. 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 on its medtech and pharmaceutical businesses. Its recent $3.5 billion acquisition of Halda Therapeutics is one example of that strategy in action. The all-cash deal gives JNJ access to Halda's clinical-stage HLD-0915 candidate, a once-daily oral drug being developed for prostate cancer that has received Fast Track designation from the U.S. Food & Drug Administration (FDA). This should be a meaningful addition to JNJ's oncology pipeline and may 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 embraced a passive "SPY and chill" approach by investing in the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). SPY may still be a solid choice, but with potential AI-driven overexuberance, it may be worth considering the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA). If concerns about an AI bubble intensify, investors are likely to rotate into the larger, more established names that make up the Dow 30. That rotation would make DIA a reasonable asymmetric play to capture a move into perceived safety. As of this writing, the DIA ETF has roughly 37% institutional ownership, but it has seen net buying in seven of the last eight quarters, suggesting institutions are beginning to build a hedge against a potential slowdown in the tech trade.
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