Novartis Plunges 3.3% Amid Tariff Fears and Sector-Wide Turmoil – What’s Next for NVS?

Summary
• Novartis (NVS) drops 3.3% to $113.82, hitting an intraday low of $113.75
• Sector leader Pfizer (PFE) also down 3.5%, signaling pharma sector fragility
• Trump’s 250% tariff threat and industry-wide layoffs amplify sell-off

Novartis’ sharp intraday decline mirrors broader pharma sector jitters as Trump’s aggressive tariff plans and cost-cutting pressures dominate headlines. With the stock trading below its 200-day moving average and key sector peers under pressure, investors are recalibrating risk amid regulatory and geopolitical headwinds.

Trump’s 250% Tariff Threat and Sector-Wide Cost-Cutting Spur NVS Sell-Off
The 3.3% drop in Novartis’ stock is directly tied to escalating fears of Trump’s 250% pharmaceutical tariff plan and a wave of sector-wide restructuring. News of BioNTech cutting 90 jobs, Merck axing 6,000 roles, and Bayer signaling further layoffs has amplified investor anxiety about margin pressures. Compounding this, Trump’s tariff announcement—coupled with Pfizer’s ongoing Most Favored Nation (MFN) pricing negotiations—has created a toxic mix of regulatory uncertainty and cost-cutting pessimism. Novartis’ recent $1B+ drug discovery deal with Matchpoint Therapeutics now faces scrutiny in a climate where profit margins are under siege.

Pharma Sector Reels as Pfizer Leads 3.5% Decline Amid Policy Uncertainty
The pharma sector is in freefall, with Pfizer (PFE) leading the charge lower after a 3.5% intraday drop. Trump’s tariff threat and MFN pricing pressures have created a synchronized sell-off across the sector. Novartis’ 3.3% decline aligns with this trend, as investors price in margin compression from both regulatory and operational headwinds. The sector’s vulnerability is underscored by BioNTech’s 90-job cut and Roche’s Alzheimer’s pipeline realignment, signaling a broader shift toward cost discipline over growth bets.

Options and ETFs to Watch: NVS20250919P115 and NVS20250919P110 Offer Bearish Exposure
• MACD: -0.5229 (bearish divergence), Signal Line: -0.4404, Histogram: -0.0824
• RSI: 48.32 (neutral but trending lower)
• Bollinger Bands: Lower band at $112.07 (critical support)
• 200D MA: $109.52 (below current price)

Novartis is testing key support levels as technical indicators confirm bearish momentum. The stock is trading near its lower Bollinger Band ($112.07), with RSI drifting toward oversold territory. Two options stand out for bearish exposure:

• NVS20250919P115 (Put, $115 strike, 2025-09-19):
- IV: 17.06% (moderate), Leverage: 34.48%, Delta: -0.5494 (high sensitivity), Theta: -0.0139 (slow decay), Gamma: 0.0578 (responsive to price swings), Turnover: 168,900 (liquid)
- This contract offers amplified downside exposure with a 34.48% leverage ratio and high gamma, ideal for a 5% downside scenario where payoff would be $1.15 per share (max(0, $115 - $108.16)).

• NVS20250919P110 (Put, $110 strike, 2025-09-19):
- IV: 20.69% (moderate), Leverage: 68.95%, Delta: -0.3016 (moderate sensitivity), Theta: -0.0234 (moderate decay), Gamma: 0.0421 (responsive), Turnover: 3,695 (liquid)
- This option balances leverage (68.95%) with moderate delta, offering a 5% downside payoff of $5.00 per share (max(0, $110 - $108.16)).

Aggressive bears should prioritize NVS20250919P115 for its high leverage and liquidity, while NVS20250919P110 suits those seeking a safer entry. If $112.07 breaks, NVS20250919P115 offers short-side potential.

Backtest Novartis Stock Performance
After an intraday plunge of at least -3%, the performance of NVS has historically shown mixed results. While the 3-day win rate is 50.52%, indicating a slightly higher probability of a positive return in the short term, the overall performance over 10 and 30 days is more favorable, with win rates of 53.11% and 53.63%, respectively. This suggests that NVS tends to recover from such significant dips, but the returns are generally modest, with a maximum return of 2.41% observed even over 30 days.

Act Now: NVS Faces Key Support at $112.07 – Position for a Potential Breakdown
Novartis’ 3.3% decline reflects a sector-wide selloff driven by Trump’s tariff threats and cost-cutting pressures. With technical indicators confirming bearish momentum and key support at $112.07 under test, the stock is primed for further downside. Investors should monitor the $112.07 level and consider bearish options like NVS20250919P115 for amplified exposure. Meanwhile, sector leader Pfizer’s 3.5% drop underscores the fragility of pharma valuations in this regulatory climate. Watch for a breakdown below $112.07 to confirm a bearish pivot.