Shares of gunmakers jumped 5% in early trading Monday after the mass shooting in Las Vegas.
Storm Ruger (RGR) was up $2.65, or 5.1%, to $54.35 and American Outdoor Brands (AOBC), the former Smith & Wesson, rose 71 cents, or 4.7%, to $15.96. Last year the board and shareholders of Smith & Wesson, which makes and sells pistols, revolvers and rifles, voted to change the name of the company to American Outdoor Brands, which CEO James Debney said at the time better “represents” the company’s “growing array of brands and businesses in the shooting, hunting and rugged outdoor enthusiast markets.”
The move higher in gun stocks is due to the perception that there is bigger potential for tighter gun controls, as well as a belief that gun buying will pick up as Americans look to better protect themselves, says Gary Kaltbaum, president of investment firm Kaltbaum Capital Management.
It is not uncommon for shares of gun makers to rise after high-profile shootings, and oftentimes the initial price moves are sparked by computer-driven trades that buy on the news.
“The market always has an instinctive reaction to events and more and more it’s algorithmically induced,” says Quincy Krosby, chief market strategist at Prudential Financial.
“Traders believe that people will go out to buy guns for self protection; perhaps those who have been thinking about it but who have been debating the merits of the purchase,” Krosby says. These attacks, which are becoming too common, too regular and a seemingly inherent part of our cultural landscape,” she adds, “have potential buyers of guns wondering if they would be more difficult to buy, or even outlawed.”