By Mackenzie Tatananni
The stock market powered through a year of volatility to mark a strong finish in 2025. While artificial intelligence was a theme that dominated 2025, many winners were instead linked to healthcare and banking.
Case in point, CVS Health: The stock was among the names that had their best year in two decades. Shares soared 58% in 2025, their best performance since 1982, according to Dow Jones Market Data. The owner of the namesake pharmacy chain and healthcare giant Aetna repeatedly exceeded Wall Street's earnings expectations, marking a contrast to a string of guidance cuts in the previous year.
CVS Health took steps to adjust its trajectory, which appeared to pay off. These include the decision to withdraw from the Affordable Care Act health insurance market in 2026 -- a move cheered by investors, as it marked a shift from high-risk, low-margin business lines. Last month, CVS Health said it expects to achieve an adjusted earnings compound annual growth rate in the midteens through 2028, instilling long-term confidence in a turnaround narrative.
It wasn't the only healthcare player that saw its best performance in decades. Drugmaker AstraZeneca and health services company Cardinal Health gained 40% and 74% in 2025, respectively.
For AstraZeneca, 2025 was its best year since 1996. Shares performed well last year, notching record intraday and closing highs on Nov. 26.
Recent developments related to drug pricing helped the stock extend its gains -- and set it up for future headwinds in the new year.
In October, AstraZeneca said it had struck a deal with the White House to slash drug prices. The pharmaceutical giant, which is based in the U.K. but earns a substantial chunk of revenue from the U.S., said it would offer all prescription medications to Medicaid at lower prices.
AstraZeneca also pledged to list many of its products on TrumpRx.com, a direct-to-consumer online drug marketplace, and pledged $50 billion to expand research and development efforts in the U.S. in exchange for a temporary tariff exemption.
Cardinal Health stock, meanwhile, ended 2025 up nearly 74%, its best year since 2000. The stellar performance was fueled by the turnaround of its medical products division and deals such as the $1.9 billion acquisition of Solaris Health in August, marking a more profitable move into specialized, high-growth clinical areas.
The financial services sector was another winner. BNY saw its strongest year in over two decades as shares gained more than 51% in 2025, their best performance since 1997.
Citigroup performed similarly well, with shares gaining nearly 66% last year, their best yearly performance since 1999. The financial holding company Northern Trust was another standout; shares surged 33% to mark their best year since 2000.
Better-than-expected earnings from banks, against the backdrop of an improving macro environment, fueled share gains in 2025. Interest rates, improving credit demand, and capital markets activities all contributed to a favorable environment, setting the stocks up for future gains. The Federal Reserve cut rates three times in 2025, and has signaled one more rate cut in 2026.
Expectations for an easing regulatory environment heading into 2026 will require banks to hold less capital, which allows them to use capital already reserved for business activities. Theoretically, this should allow them to become more profitable.
If optimism persists, long-term bond yields will likely rise while short-term yields decline due to the Fed's rate cuts. This would result in a steeper yield curve, which is a good sign for banks. A steep yield curve would boost their net interest margin -- a key profitability metric for banks, as they earn more on long loans than they pay on short deposits.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 02, 2026 13:55 ET (18:55 GMT)
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