Nasdaq Falls 1.4% as Alphabet's Record Plunge Drags the Indexes Lower While Most Stocks Rise

U.S. stocks closed lower on Thursday, Oct. 29, as Alphabet's record one-day plunge pulled the cap-weighted indexes down even though most stocks rose.

The Nasdaq Composite fell 1.4%. The S&P 500 fell 0.3%. The Dow Jones Industrial Average fell 0.3%, down 132 points.

Most stocks in the S&P 500 ended the day higher. Most sectors finished green. The Russell 2000 and the S&P MidCap 400, two indexes of smaller companies, both gained. Communication services was the standout decliner. The indexes fell because a few huge technology names fell hard, not because investors sold broadly.

Alphabet's worst day on record erased more than $500 billion

Alphabet closed down 12.6% at $283.82. Barron's called it the worst trading day in the company's 22 years as a public company. Reuters reported that Alphabet erased more than $500 billion in market value. That was most of a Nasdaq-100 wipeout of more than $693 billion, Reuters reported.

The trigger was Wednesday's third-quarter report. Revenue rose 25% to $127.58 billion. That missed the roughly $127.97 billion analysts expected. Search and YouTube advertising revenue also missed expectations. Cloud revenue more than doubled, rising 103% to $30.71 billion. Spending overwhelmed the growth. Capital spending topped $51 billion, and free cash flow was negative $9.07 billion. Free cash flow is the cash left after capital spending. TickerGrove covered Alphabet's quarter in full in separate coverage.

Software stocks routed as guidance fell short

ServiceNow closed down 27.0% at $109.67. It was the stock's largest one-day fall since its 2012 initial public offering. An initial public offering is a company's first sale of shares to the public. The company guided fourth-quarter cRPO growth of 18.5% in constant currency. cRPO is current remaining performance obligations, a backlog measure. That pace slowed from 20.5% growth in the third quarter.

Fortinet closed down 20.1% at $139.10. The cybersecurity firm beat expectations and raised its guidance. Investors focused elsewhere. Fortinet trimmed its full-year services revenue forecast by about $40 million at the midpoint. Product revenue growth also slowed. Reuters reported that at least 15 brokerages cut their price targets on Fortinet. Bank of America downgraded the stock to neutral from buy.

Caterpillar fell, Lilly hit a record, and Microsoft held nearly flat

Caterpillar closed down 9.3% at $647.39. Its third quarter beat expectations, with revenue up 17% to $20.7 billion. Adjusted earnings were $7.20 a share. The company only maintained its full-year sales guidance. It guided the fourth quarter to moderate growth, below the roughly $21.42 billion consensus. The backlog reached a record $78.1 billion. TickerGrove covered Caterpillar's quarter in full in separate coverage.

Eli Lilly closed up 6.6% at $1,373.70, a record high. Third-quarter revenue rose 39% to $24.4 billion. Lilly raised its full-year 2026 revenue guidance to $91 billion to $92 billion. TickerGrove covered Lilly's quarter in full in separate coverage.

Microsoft closed down 0.2% at $530.14. Early gains faded during the session. Microsoft disclosed Azure revenue of $33.2 billion, up 48%. Total revenue of $92.28 billion beat expectations. Its bond sale of at least $25 billion drew about $115 billion in orders. It was Microsoft's first U.S. investment-grade deal since 2017. TickerGrove covered Microsoft's quarter in full in separate coverage.

ADT closed up 33.2% at $9.87. Thrive Holdings agreed to take the security firm private at $10.00 a share in cash. The deal values ADT's equity at $7.6 billion and the enterprise at $15.3 billion. DoorDash and Instacart announced a definitive deal worth about $17 billion. TickerGrove covered that agreement in full in separate coverage.

Growth beat, inflation matched forecasts, and yields fell

The economy grew at a 3.4% annualized pace in the third quarter. The Bureau of Economic Analysis advance estimate was the fastest growth in about a year. Consumer spending rose 3.8%. Business investment rose 12.7%. September inflation matched forecasts. The personal consumption expenditures price index rose 3.6% from a year earlier. Core prices, excluding food and energy, rose 3.1%.

The yield on the 10-year Treasury note fell to 4.988%. It dropped 5.6 basis points, snapping a four-day rise. A basis point is one-hundredth of a percentage point. Traders kept their bets on a December rate hike from the Federal Reserve. The Fed held rates steady on Wednesday. In Europe, the European Central Bank held its rate at 2.50%, and President Christine Lagarde announced her exit. TickerGrove covered the ECB decision in full in separate coverage. Oil fell as hopes for peace talks offset supply fears, Reuters reported.

Amazon reports after the close, and what remains unknown

Amazon reports after Thursday's close, with a conference call at 5 p.m. ET. Intel, SanDisk and Gilead Sciences also report after the close. Friday brings Exxon Mobil, Chevron and AbbVie before the open. The third-quarter Employment Cost Index lands Friday. The Bank of Japan also announces its policy decision.

What remains unknown is whether Amazon and Intel extend or reverse Thursday's verdict on artificial-intelligence spending. It is also unknown whether the software rout spreads beyond Thursday's names. December Fed pricing may shift again once more data lands.