Key Highlights

● Shares fell about 9% on Thursday after the company kept its annual sales forecast unchanged.

● Data-center Demand for power equipment was strong but did not satisfy investors.

● The drop weighed on the price-weighted Dow even as 23 of 30 components rose.

● The Chicago PMI at 9:45 a.m. ET is expected at 54.6 after 58.8.

Caterpillar (NYSE:CAT) heads into Friday's session in focus after one of the sharpest single-day drops among blue chips this week. The heavy-equipment maker's shares fell about 9% on Thursday after it reported third-quarter results and kept its annual sales growth forecast unchanged, according to media reports. No pre-market quote for the stock was available as of about 8:30 a.m. ET, so whether the selling continues is not yet clear.

A rare laggard on a strong day for the Dow

The decline stood out because the rest of the Dow was broadly firm. According to market data, 23 of the 30 Dow components rose on Thursday, even though the index itself slipped 0.25% to 52,342.56. A large drop in a high-priced stock such as Caterpillar carries outsized weight in a price-weighted average, which is part of why the Dow finished lower despite that breadth.

Data-center demand was not enough

The selloff came despite a positive theme. Media reports noted that demand for Caterpillar's power equipment from data centers was strong. The company sells engines, gas turbines and generator sets that are increasingly used to provide on-site or backup power for large computing facilities, in addition to its core construction and Mining machinery.

The reaction suggests investors had been hoping for a higher full-year sales outlook to match that demand. Holding the forecast steady, rather than raising it, appears to have disappointed a market that had priced in strong growth. That is an inference from the timing of the move; the company's full figures and commentary were not available.

The pattern echoes the rest of this Earnings season. Companies tied to the AI build-out have been punished when results or outlooks merely meet expectations. "The earnings bar is very high," one market strategist said. Power-equipment peer GE Vernova (NYSE:GEV) was down 2.75% pre-market Friday as analysts adjusted their targets, according to market data.

Backdrop, risks and what to watch

Friday's setup is split. Dow futures were roughly flat around 8 a.m. ET while Nasdaq-100 futures were down about 2.6%, according to market quotes, as Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) results revived worries about AI spending. Oil above $100 a barrel can support mining and energy customers but also raises costs across the economy, and Section 232 tariffs of 50% on steel, aluminum and copper keep input costs elevated for heavy manufacturers.

Rates matter for equipment buyers. The Fed held rates this week after a September hike, and markets see a high chance of another increase in December, with the 10-year Treasury Yield near 4.94% to 4.99%.

The next data point for industrial demand arrives at 9:45 a.m. ET, when the Chicago PMI for October is released; economists expect 54.6 after 58.8. Traders will also watch whether Caterpillar stabilizes after the open, before next week's midterm elections and the October jobs report on November 6.