Key Highlights

● The Dow lost 132.54 points to close at 52,342.56 on October 29.

● Caterpillar was the worst Dow performer, closing at $647.39.

● Advancers outnumbered decliners on the NYSE by nearly 2 to 1.

● Merck led the Dow higher after raising its full-year profit outlook.

The Blue-Chip Dow Jones Industrial Average closed lower on Thursday, but its quirks as a price-weighted index meant a few heavy hitters, led by Caterpillar (NYSE:CAT), did the damage while the wider market rallied.

A quirky index on a split day

The Dow Jones Industrial Average lost 132.54 points to close at 52,342.56 on Thursday, October 29. On its face, that fits a day when the large-cap benchmarks posted their first decline in four sessions. But the Dow's slide had a different flavor from the Nasdaq's tumble, and it came even as advancers on the New York Stock Exchange outnumbered decliners by nearly 2 to 1.

The reason is how the Dow is built. Unlike the S&P 500, which weights companies by market value, the 30-stock Dow weights by share price. A stock trading at several hundred dollars moves the average far more than one trading at $40, regardless of the companies' overall size.

Caterpillar's heavy footprint

That made Caterpillar the day's biggest problem. The machinery maker was the Dow's worst performer, closing at $647.39 in what one source described as its worst day since March 2020. Its third-quarter adjusted EPS of $7.20 topped expectations and its Backlog hit a record of about $78 billion, but the beat was modest and backlog growth slowed. Another report said the stock fell even further at one point during the session. With a share price that high, every dollar Caterpillar lost weighed heavily on the average.

Alphabet is not in the Dow, but Amazon is

Thursday's headline story, Alphabet (NASDAQ:GOOGL)'s historic plunge, did not directly touch the Dow, because Alphabet is not one of its components. Some market summaries listed it among Dow losers in error. The tech damage reached the blue-chip average through other doors.

Amazon (NASDAQ:AMZN), a Dow member, slid to $243.79 in the regular session ahead of its quarterly report. Salesforce (NYSE:CRM) fell as the software selloff triggered by ServiceNow (NYSE:NOW) and Fortinet (NASDAQ:FTNT) spread. Nvidia (NASDAQ:NVDA) edged lower to $213.66, and Microsoft (NASDAQ:MSFT) finished roughly flat to slightly lower after an early pop on its well-received results.

The gainers kept losses in check

On the other side of the ledger, Merck (NYSE:MRK) led the Dow higher after beating quarterly forecasts and raising its full-year profit outlook, helped by Keytruda and Winrevair. Nike (NYSE:NKE) climbed to about $38.37 from $37.15 without hard news, according to market data, in a rebound for a stock that had been weighed down by China weakness and analyst target cuts. Boeing (NYSE:BA) also rebounded.

A broad swath of other Dow names, from health insurers to banks and consumer staples, appeared to move higher with the equal-weight rally, though individual figures for many of them were not confirmed. Their gains explain why the average's loss was relatively contained compared with the Nasdaq's slide.

October still looks green

Despite Thursday's dip, the Dow was sitting on a gain for October as of midday, according to a market snapshot, in sharp contrast with the Nasdaq-100, which was down for the month. The rotation away from mega-cap tech and into health care, financials and industrials has generally favored the Dow's old-economy mix.

What to watch

Amazon slid in after-hours trading after its report, a potential drag on the Dow on Friday, even as Dow futures edged up in early evening trading. Friday also brings the Employment Cost Index and Earnings from Chevron (NYSE:CVX), a Dow member, which could decide whether the blue-chip average locks in a winning October heading into the November 3 midterm elections.