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Johnson & Johnson is a diversified global healthcare company that develops, manufactures, and markets products in two business segments: Innovative Medicine (formerly Pharmaceuticals) and MedTech.

The long-term trend in the U.S. stock market has been higher. In the more-than 40 years since Ronald Reagan became president in 1980, stocks have turned in profitable performances almost 80% of the time. The average annual gain has been 13%. The year 2024 was another winner, as stocks extended a bull market that started in October 2022. But 2025 is off to a dismal start, with a year-to-date decline of 6% and a peak-to-trough slump of 9.5% to current levels -- essentially a correction. What is more, the recent leading sectors of the stock market -- Information Technology stocks in particular, growth stocks in general and U.S. stocks versus international stocks -- have lagged. There is always new data emerging for investors to consider, and they can modify their outlooks and strategies as needed. The new data this go-round is primarily the trade policies of President Trump, and the related concerns among market participants that this economic approach could lead to a recession, inflation, or a decline in EPS. We started the year with a bullish outlook, expecting (normal) double-digit stock-market returns based on: economic growth; double-digit EPS growth; and lower interest rates. The planks of our platform remain in place. Consequently, we are maintaining our call for a positive year for stocks, despite the weakness in 1Q. We note a change in the investment outlook, though, and will be focusing more on opportunities in value-oriented sectors, such as Financial and Healthcare, and in international stocks.

Well, we've finally reached 'Liberation Day' and will see if the stock market has discounted all the rumors. Is it time to buy the news, or is the tariff bite worse than the tariff bark? Will the S&P 500 (SPX) break to new corrective lows, possibly heading a lot closer to 5,000 before we see 6,000 again? We continue to lean toward a contrarian bullish outcome as sentiment is abysmal and it seems like the majority of the investment world is looking for and preparing for the worst. In addition, about 60 of the stocks in the SPX have fallen between 15% and 44% so far in 2025, meaning that there already has been quite a washout in many names. One thing aiding stocks is the drop in Treasury yields and the patterns they have been tracing out over the past five months. The 10-year has dropped from 4.39% to a close on Tuesday at 4.16%. The five-year has fallen from 4.12% to 3.91%. While the declines are small, both maturities are potentially tracing out head-and-shoulders tops. The neckline for the 10-year is in the 4.1%-4.2% area, with the left shoulder, the head, and the right shoulder complete. A break of the neckline could open the door for an initial measured move to 3.7%, and maybe down to 3.5%. The most-recent closing low was in September 2024 at 3.62%. The five-year may already have broken its neckline as it is difficult to draw a horizontal line because the recent low of right shoulder is below the low of the left shoulder low. Anyway, it's possible the five-year drops to the 3.4%-3.5% area. The recent low from September was 3.4%. The one negative about falling rates is that they imply a weakening economy.

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