Caterpillar’s Earnings Plunge Hits These 3 Popular ETFs Hardest
Caterpillar dropped more than 7% after its latest earnings report, but three of the most popular ETFs in retirement accounts actually finished the day higher. Understanding why reveals a hidden concentration risk sitting inside millions of portfolios.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Shares of Caterpillar (NYSE:CAT | CAT Price Prediction) fell 7.27% to $661.54 in Thursday’s regular session after the company’s third-quarter earnings report. CNBC named Caterpillar and Alphabet (NASDAQ:GOOGL) as the two earnings reports dragging the S&P 500 lower today. Many index fund investors own Caterpillar without choosing it directly. It sits near the top of the most popular industrial funds and inside some of the biggest dividend ETFs held in retirement accounts.
Today’s drop adds to a rough stretch. Caterpillar is down 10.42% over the past week and 19.13% over the past month. Over longer periods it is still well ahead, up 16.47% year to date and 252.29% over five years.
Why Caterpillar Shares Slid After a Profit Beat
Caterpillar released its results at 6:33 AM ET on October 29, 2026 and held its call at 8:30 AM ET. Adjusted EPS came in at $7.20 against a $7.04 consensus. GAAP diluted EPS was $7.13. Revenue of $20.68 billion rose 17.26% year over year while missing expectations of $20.69 billion. The Wall Street Journal’s same-day coverage tied the slide to the revenue miss.
The miss itself was small, a -0.05% revenue surprise. What changed was the quarter-to-quarter comparison. Here is what investors were looking at on October 29:
- A much smaller beat: In Q2, reported on August 4, 2026, Caterpillar exceeded EPS estimates by 31.83% and revenue estimates by 7%. This quarter the EPS beat narrowed to 2.37%.
- Less tariff relief: Operating profit included $128 million of IEEPA tariff recoveries, compared with $392 million in Q2.
- A lower tax rate: The effective tax rate fell to 22.9% from 26.7% a year earlier, which helped the bottom line.
- Weak spots: Asia Pacific revenue fell 2%, rail retail sales dropped 70%, and Cat Financial’s allowance for credit losses rose to $332 million.
- No numbers on the outlook: Management pointed to strong order rates and a record backlog but provided no numeric guidance.
Demand still looked healthy. Power Generation sales rose 30% on data-center turbines and engines, and total dealer retail sales grew 22%. Chief executive Joe Creed said the results “reflect the durability of our end markets, with strong order rates and a record backlog.” Even so, the stock had already fallen from $842 at the Q2 report to $716 when this release came out. Investors who were already worried got a smaller beat and less tariff help.
Three Popular ETFs Ranked by Caterpillar Weight
The table ranks three widely held ETFs by how much of their net assets were in Caterpillar as of their latest portfolio filings, largest first. The “today” column shows each fund’s move in the October 29 regular session.
| ETF | Caterpillar Weight | Holdings As Of | Today’s Move |
|---|---|---|---|
| Industrial Select Sector SPDR Fund (NYSEARCA:XLI) | 8.51% | June 30, 2026 | +0.55% |
| Fidelity MSCI Industrials Index ETF (NYSEARCA:FIDU) | 5.40% | July 31, 2026 | +0.68% |
| Vanguard High Dividend Yield ETF (NYSEARCA:VYM) | 1.50% | July 31, 2026 | +0.54% |
Caterpillar’s price has fallen since these figures were taken, so its actual weight in each fund today is probably a bit lower than shown.
1. Industrial Select Sector SPDR Fund
The Industrial Select Sector SPDR Fund had Caterpillar as its largest position at 8.51% of roughly $34 billion in net assets. That stake was worth about $2.89 billion. The next largest holdings were General Electric at 6.77% and GE Vernova at 5.48%. Even with this much Caterpillar, XLI traded at $169.41, up 0.55% on the day.
2. Fidelity MSCI Industrials Index ETF
The Fidelity MSCI Industrials Index ETF held Caterpillar as its top position at 5.40%, just ahead of General Electric at 5.35%. FIDU spreads its money across hundreds of small and mid-size industrials, so Caterpillar takes up less of the fund than it does in XLI. FIDU rose 0.68% to $89.72.
3. Vanguard High Dividend Yield ETF
The Vanguard High Dividend Yield ETF is where many income-focused retirement savers end up owning Caterpillar without noticing. Its 1.50% weight was worth about $1.49 billion, roughly level with Chevron’s 1.48%. VYM rose 0.54% to $164.26.
How These Funds Rose While Caterpillar Fell
All three funds were up at the same time their biggest or near-biggest industrial holding dropped more than 7%. Diversification absorbed the single-stock loss. The rest of each portfolio offset the Caterpillar loss in this session. The past month shows the same thing. Caterpillar fell 19.13%, while XLI gained 0.37% and VYM gained 4.22% through October 28.
Diversification works in both directions, though. The weight that cushions XLI on a day like today also makes the fund depend more on one company than most investors realize. When Caterpillar was rising, XLI holders got more of the gains. Over the next few quarters, an extended slide in Caterpillar would drag on XLI more than on any of the other funds here.
Overlap Risk When You Own More Than One
Retirement portfolios often combine a sector fund, a dividend fund and a broad index fund. Caterpillar shows up in all three. XLI and FIDU also share the same group of top names: Caterpillar, General Electric, GE Vernova and RTX are among the largest positions in both. If you hold XLI and VYM together, your total Caterpillar exposure is higher than either fund shows on its own. Adding an S&P 500 fund raises it again. To check your own exposure, look up each fund’s Caterpillar weight, multiply it by how much of your portfolio that fund makes up, and add the results.
What Retirement Investors Should Watch Next
Management said it will discuss fourth-quarter and full-year 2026 adjusted EPS, so watch for any numbers it attaches to the outlook. Three other things matter:
- Whether tariff recoveries keep narrowed. Management had said its outlook did not include additional IEEPA recoveries in the second half.
- Whether Asia Pacific keeps declining.
- Whether Power Generation can keep growing faster than 30%.
XLI holders have the most riding on all of this. VYM holders have the least.
The clearest test is the backlog. Caterpillar reported a backlog of $72 billion at the end of Q2 and described it as a record again this quarter. If the next quarterly report shows the backlog below $72 billion, the main argument for Caterpillar’s demand story stops holding, and the industrial funds that own the most of it will feel that more than today’s drop.
Contact [email protected] for any questions or corrections.
Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
