The CNBC Investing Club with Jim Cramer removed CVS Health from its Bullpen watchlist after the company announced plans to separate its retail pharmacy business from insurer Aetna and pharmacy benefit manager CVS Caremark. The separation is not expected to be completed until the first half of 2028, a timeline the Club said could leave the stock in “spin purgatory” while investors wait for the deal to advance.
The Club had added CVS to the watchlist in early September, attracted by its execution under CEO David Joyner, valuation and dividend yield. It said the rationale had changed with the separation announcement. The move is a watchlist change, rather than a stated sale of shares from the Club’s portfolio.
The update also described a broad market rally on Wednesday following the midterm elections, with the S&P 500 rising about 1.7%. WTI crude fell more than 8% to below $90 a barrel, while the 10-year Treasury yield declined to 4.9%. The Club linked the moves to expectations around the election outcome, including the possibility of less escalation in the Middle East and a rollback of tariffs.
Lower oil prices and yields helped housing-related stocks, including Home Depot, as well as consumer staples and discretionary shares. By contrast, data center infrastructure stocks came under pressure amid concerns that election results could slow new construction, particularly in Texas and Ohio. The Club cautioned that it was too early to know whether political opposition would lead to policy changes or materially affect company results.
Intel shares remained weak but pared losses after a filing showed CEO Lip-Bu Tan bought 150,000 shares on Monday at an average price of $64.73. The Club welcomed the purchase as a sign of confidence, while noting that its significance was tempered by Tan and the Club having bought shares in the $90s in August, when Intel sold about $20 billion of stock.
The update noted that Amazon, Alphabet and Microsoft rose as some companies supplying the AI infrastructure buildout fell. It said investors may see potential limits on data center construction as a reason for hyperscalers to slow capital spending, which could improve free cash flow and reduce the need for large debt or equity offerings. The Club said it did not want to overreact to the market swings, but acknowledged that some chip and infrastructure stocks had become less compelling than they appeared the previous week.
Sources: CNBC Markets.