Update: US Equity Indexes Decline as Alphabet's Disappointing Earnings Decimate Communication Services

05:09 PM EDT, 10/29/2026 (MT Newswires) -- (Updates with index/price moves, macroeconomic data, and company news from the first paragraph.) US equity indexes fell as the sell-off in Alphabet (GOOG, GOOGL) sank the communication services sector while also weighing on mega-cap technology names, overshadowing gains elsewhere. The Nasdaq Composite dropped 1.4% to 26,184.72, the S&P 500 fell 0.3% to 7,720.39, and the Dow Jones Industrial Average retreated 0.3% to 52,342.56. Communication services plunged 6.6%, followed by declines in technology and consumer discretionary. All but three sectors rose, led by real estate, consumer staples, and utilities. Alphabet led decliners among mega-caps, with shares down 13% after the technology giant's Q3 earnings unexpectedly slid from a year ago and sales lagged. The Google search engine owner was also among the worst performers on the S&P 500, the Nasdaq, and the Dow. Alphabet's Google search revenue miss drove the Q3 top-line shortfall as more people used artificial-intelligence-led summaries that appear at the top of search results, BofA Securities said in a note. Caterpillar (CAT) was the third-worst performer among the index heavyweights, sliding 9.3% after the company reported Q3 revenue that fell short of consensus. Its shares were also among the Dow's biggest decliners. Fortinet (FTNT) was hit by a flurry of analyst price-target cuts, with Citigroup slashing its price target to $140 from $185 and Barclays to $155 from $210, following the company's Q3 results late Wednesday. Shares of the software group plummeted 20%, among the S&P 500 and the Nasdaq's sharpest decliners. Microsoft (MSFT) posted fiscal Q1 adjusted earnings and revenue that beat market expectations late Wednesday, but shares still slipped less than 0.2% amid a drop in risk appetite for hyperscalers. The iShares PHLX Semiconductor Exchange Traded Fund, which has about $48.43 billion in assets under management, dropped 1.6%, reflecting selling in AI-related names. In economic news, the personal consumption expenditures price index increased by 0.5% in September, as expected, lifting the year-over-year rate to 3.6% from 3.4%, the Bureau of Economic Analysis reported. The price index increased by 0.3% month-over-month in August. The core PCE price index rose by 0.3%, as expected after a 0.3% gain in August. The year-over-year rate accelerated to 3.1% in September from 3.0% in the previous month. "Alongside firm economic activity, this renewed inflation momentum keeps another (Federal Reserve) rate hike in December firmly on the table," TD Economics Economist Ksenia Bushmeneva said in a note. Meanwhile, US economic growth, measured by gross domestic product, rose by 3.4% in Q3 after a 2.2% gain in Q2, above a 3.2% increase expected in a survey compiled by Bloomberg. The second estimate of Q3 GDP is scheduled to be released on Nov. 25, according to the US Bureau of Economic Analysis. "The biggest drivers of growth were consumer spending, investment in equipment, inventory accumulation, and federal government spending," Thomas Simons, US chief economist at Jefferies, said in a note. "These were offset to a large degree by a massive widening in the trade deficit." US Treasury yields fell following the stronger-than-expected economic growth data and the Fed's preferred inflation coming in line with expectations. The two-year yield slumped nine basis points to 4.60%, and the 10-year rate dropped eight basis points to 4.94%. The front-month West Texas Intermediate crude oil contract was little changed at $102.79 per barrel, and global benchmark Brent rose 0.3% to $115.65 per barrel. Gold futures slipped 0.3% to $4,038.3, and silver futures dropped 2.2% to $52.47.