Key Highlights

  • ESAB climbed on Friday, grouped with trucking company ArcBest, generator maker Generac, fuel-cell company Bloom Energy and Universal Logistics among stocks described as soaring, with no company-specific news found.
  • The company sells welding and cutting equipment, consumables such as electrodes and filler metals, and gas control products to shipbuilders, construction firms, energy companies, auto and machinery manufacturers.
  • The jobs report showed Manufacturing added 9,000 jobs, including 5,000 in machinery, and construction added 11,000, modest bright spots amid the weak headline figure.
  • Market breadth remained thin, with about three in four S&P 500 stocks trading below their 50-day moving averages even as the broader market posted gains.

ESAB rose with other equipment and transport names as a weak jobs report cooled expectations of another rate hike. Shares climbed on Friday, making the welding specialist one of the gainers on the S&P MidCap 400 as buyers moved into industrial mid-caps after September payrolls came in far below forecasts. NYSE:ESAB was among a set of stocks described as soaring on the day, a group that also included trucking company ArcBest, generator maker Generac, fuel-cell company Bloom Energy and Universal Logistics. The gains were tied to the weak jobs report pulling Treasury yields and rate-hike expectations lower. No company-specific news was found for ESAB.

What ESAB Makes

ESAB designs and sells welding and cutting equipment, the consumables that go with it, such as electrodes and filler metals, and gas control products used in hospitals and industry. Its customers include shipbuilders, construction firms, energy companies, auto and machinery manufacturers and general fabrication shops.

That spread of customers makes ESAB something of a barometer for heavy industry. When manufacturers and builders are busy, they burn through welding wire and replace equipment. When they pull back, orders slow. Repeat purchases of consumables tend to smooth the cycle somewhat.

The Trigger: Hiring Stalls

The Bureau of Labor Statistics said the US added only 29,000 jobs in September, well below the roughly 84,000 economists had forecast. Revisions erased a combined 60,000 jobs from July and August. The average workweek held at 34.4 hours.

Fifth Third's Bill Adams offered a nuance: the Unemployment rate edged up as more people entered the labor force, but the unemployment-and-underemployment rate edged lower, taking some sting out of the headline.

Markets focused on the slowdown. The Federal Reserve, which raised rates on September 16 for the first time since 2023, now looks less likely to move again on October 27-28. Odds of an October hike collapsed to roughly one in five after the report, from about two in three earlier in the week.

For manufacturing, the details were mixed but not bad. The sector added 9,000 jobs, including 5,000 in machinery, and construction added 11,000. August factory orders edged up.

Bloom and Friends

The power names in ESAB's group drew plenty of attention. Bloom Energy ranked among the top gainers in the S&P 500. Generac also climbed. In transport, ArcBest and Universal Logistics both rallied, though the hiring slowdown was noted as introducing cyclical vulnerability.

The broader market was firm. The S&P 500 rose 56.27 points to 7,722.72, the Dow added 250.40 points to 51,176.96, and industrials were the third-best S&P sector. Fellow mid-cap industrials Terex and Regal Rexnord also rose.

Yields Did Not Cooperate

The relief in rates did not survive the full session. Treasury yields fell right after the jobs report but reversed to close higher, and the 10-year finished near its highest level since 2002. That leaves financing costs elevated for the capital projects that drive Demand for welding gear.

Breadth was also thin. About three in four S&P 500 stocks trade below their 50-day moving averages.

Equipment Orders Versus Consumable Restocking

ESAB's next Quarterly Report will show whether industrial customers are ordering more equipment or simply restocking consumables. Watch for any change in the Fed's tone before its October 27-28 decision, and for the September Inflation reports that will feed into it. Big-bank results on October 13 and 14 may shed light on how much industrial companies are borrowing.