Caterpillar, the Dow's best stock of 2026, is unraveling — and an earnings beat couldn't stop it

Wall Street is still dumping stocks tied to the AI build-out, and an earnings beat offers no protection. Caterpillar ( CAT ) topped estimates and is sinking anyway.

The heavy-equipment maker, which sells power-generation gear to data centers, posted third quarter adjusted profit above forecasts and a record backlog of about $78 billion. But tariff refunds helped the profit number, revenue was roughly in line, and the company guided to only "moderate" sales growth in the fourth quarter.

That wasn't enough for a stock priced for more. Caterpillar is on track for its worst day since March 2020, two weeks before stocks hit their pandemic lows, and its lowest close since January.

The fall is steep, a mirror of its ascent. Caterpillar was the best-performing stock in the Dow ( ^DJI ) for about half of this year, according to Yahoo Finance calculations, and finished June up 86%, far ahead of any other member.

It hasn't held the top spot since early October. Thursday's drop leaves the stock nearly 40% below its June record and its 2026 gain in the middle of the pack, well behind new leader Chevron ( CVX ).

The selloff has erased more than $190 billion in market value from Caterpillar's peak.

Some investors were already heading for the exits before the report. Todd Sohn, managing director and chief ETF strategist at Baird Strategas, found that investors have been pulling cash from funds that hold economically sensitive stocks like Caterpillar and moving it into safer areas such as healthcare and utilities.

That kind of retreat is rare with the S&P 500 ( ^GSPC ) so close to its record, Sohn wrote in a Tuesday note, and it means expectations for those stocks are already low. "It's a low bar for cyclical areas to bounce back," he wrote.

Thursday's drop has already carried Caterpillar through its February and March lows near $665, and the stock is now approaching potential support around $625, where buyers stepped in back in January. If that gives way, the next floor sits near $540, a level that would erase the stock's entire 2026 gain.

Internal AI tools helped analyze interview transcripts, research, and draft this post. Humans reviewed, edited, and fact-checked this post before publication.

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com .