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Today's Bonus News 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. Earlier in 2025, the NASDAQ and S&P 500 also reached new all-time highs (ATHs). Despite sharp price swings, it has been a strong year for equity investors. Still, many economists, analysts, and investors remain uneasy. The market appears priced for perfection—recession risks, by contrast, seem underappreciated. Even with broad gains, skepticism persists. The Magnificent 7 trade may have cooled, but the market is clearly being lifted by a narrow group of names, many tied to the AI boom. The K-Shaped Economy Concern Current commentary centers on a K-shaped recovery. Higher-income consumers are navigating inflation near 3%—still above the Federal Reserve's informal 2% target, but generally manageable for affluent households. Lower-income consumers, however, have been under pressure for several years. Rising credit defaults, delinquent auto loans, and an uptick in foreclosures suggest these strains are 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%, citing a de-escalation of trade tensions. That nonetheless leaves recession risk materially elevated. Market Breadth Remains Narrow as Investors Chase Mega-Caps 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%. Historically, that represents low market breadth and adds to investor concern. This isn't a replay of 2021, when investors piled into unprofitable SPACs hoping to strike it rich. Today, the froth is concentrated in mega-cap stocks with sizable cash balances—yet many investors believe those names are overvalued. So what should an investor do? Here are three stocks (and ETFs) 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 increased its dividend for at least 50 consecutive years—70 in PG's case—making it a staple for income-focused portfolios. The stock yields about 2.8%, which could look more attractive if interest rates fall. Analysts' consensus $171.53 price target implies roughly 17% upside for 2025. It remains unclear how the proposed acquisition of Kenvue (NYSE: KVUE) would affect earnings. If the deal closes and the Tylenol controversy subsides, the company may see a slight EPS dilution in the first year. Over time, however, cost synergies between the two businesses would likely help turn that dilution into EPS accretion. Johnson & Johnson Doubles Down on Medtech and Oncology Growth Johnson & Johnson (NYSE: JNJ) spun off Kenvue in 2023 to focus more on its medtech and pharmaceutical franchises. One example of that focus is its recent $3.5 billion acquisition of Haida Therapeutics, an all-cash deal that gives JNJ access to the clinical-stage HLD-0915 candidate. HLD-0915 is a once-daily oral prostate cancer medication that has received fast-track designation from the U.S. Food and Drug Administration (FDA). This addition meaningfully strengthens JNJ's oncology pipeline and should increase the stock's appeal to growth-oriented investors. The DIA ETF Could Benefit From a Flight to Safety Over the past five years, many investors adopted a passive "SPY and chill" approach by investing in the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). SPY may still be a fine holding, but with potential AI-driven overexuberance, it could be worth considering the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) instead. If concerns about an AI bubble lead to a rotation out of mega-cap tech, investors may move into the Dow 30's more diversified industrial and consumer names—making DIA an attractive asymmetric play to capture that rotation. As of this writing, DIA has roughly 37% institutional ownership, but it has seen more buying than selling 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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