Please ensure Javascript is enabled for purposes of website accessibility

Why CVS Health Stock Soared Today

By Keith Speights - Mar 17, 2020 at 3:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are excited about a potential huge federal stimulus package.

What happened

Shares of CVS Health (CVS -1.42%) were soaring 11.8% higher as of 3 p.m. EDT on Tuesday after sinking yesterday. The big jump came on reports that the Trump administration is considering a stimulus package totaling close to $1 trillion to help boost the economy in the midst of the coronavirus pandemic.

So what

Investors are viewing the prospects of a major federal action to help individuals and businesses recover from the impact of the coronavirus outbreak as very good news. Any program that helps reduce unemployment caused by the COVID-19 worries and puts more money in the hands of consumers would likely provide some benefit to retailers, including CVS Health.

CVS pharmacy store

Image source: CVS Health.

But, as usual, the devil is in the details. It remains unknown at this point what the potential federal stimulus package will include. And the contents of any major spending bill will influence how much political support it receives.

Some of CVS Health's business will be negatively impacted by the pandemic. For example, the company's retail stores could experience significantly lower customer traffic as people stay home to practice the social distancing recommended by health experts. CVS' Aetna health insurance business could be affected by higher medical costs if the number of COVID-19 cases is especially severe. On the other hand, CVS Health's prescription drug sales and pharmacy benefits management (PBM) are less likely to be affected in a major way by the coronavirus outbreak.

Now what

Healthcare stocks, including CVS Health, are likely to remain very volatile over the next few weeks and possibly over the next several months. A lot rides on how bad the COVID-19 outbreak is in the U.S. and what the federal government ultimately does to help spur a recovery. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CVS Health Corporation Stock Quote
CVS Health Corporation
CVS
$104.92 (-1.42%) $-1.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.