Gun Stocks Follow Familiar Pattern After Latest Mass Shooting

The Street

The reaction is so predictable you can set your watch to it.

A mass shooting occurs, the news covers it, calls for gun control or reform grow louder for a while, nothing of impact happens legislatively, the country forgets about shootings until the next big one. 

Anyone paying attention can see that pattern and there are plenty of examples to choose from.

This year there have been 202 mass shootings — shootings with 4 or more victims other than the gunman —  and 9 mass murders in the U.S., according to gun control advocacy group Gun Violence Archive.

It happened again over the weekend. On May 14 a gunman opened fire in a Tops Friendly Markets grocery store in a predominantly black neighborhood in Buffalo, New York, killing 10 and wounding three. The 18-year-old suspect even livestreamed the attack on the social media platform Twitch.

President Joe Biden has announced plans to visit Buffalo on May 17 to discuss the shooting. While the President is taking a couple of days to respond, market investors have already placed their bets.

Sturm Ruger, Smith & Wesson Make Gains

Wall Street also follows a pattern that is as predictable as the one described above.

Following mass shootings gun maker stocks usually rise, and Monday’s session following the Buffalo shooting has been no different.

Shares of Sturm, Ruger & Co  (RGR) – Get Sturm, Ruger & Company, Inc. Report were up about 1% at last check while fellow gun manufacturer Smith & Wesson Brands  (SWBI) – Get Smith & Wesson Brands, Inc. Report was up 2.4% at last check, paring some of the gains from earlier in the session when it was up 4%.

The Same pattern occurred following weekend mass shootings in El Paso, Texas and Dayton, Ohio in 2019. The Same pattern occurred after 17 people, mostly students, were killed at a high school in Parkland Florida in 2018. The Same thing happened following the the 2017 Las Vegas shooting when 58 people were killed in the deadliest mass shooting ever on U.S. soil.

Gun stocks going up as the President calls for gun reform isn’t new, but it does seem counterintuitive.

Markets anticipate a gun run following a mass shooting as the calls for regulation inevitably grow in the immediate aftermath of some tragedies.

However, depending which political party is in charge, those calls either go completely unheeded with Republicans in office or with dutiful lip service  if Democrats are in power.

Presidential Effect on Gun Stocks

Last March, President Joe Biden called for a ban on assault weapons. This declaration came a day after 10 people were killed at a supermarket in Colorado.

Biden also called on the Senate to “immediately pass the two House-passed bills that closed loopholes in the background-check system.”

Biden noted that those two bills received support from both Democrats and Republicans in the House. He said in White House statements that gun violence “should not be a partisan issue. This is an American issue.”

Needless to say, those bills didn’t get very far in the legislative process. And the threats of regulation have only benefitted gun stocks.

Sturm, Ruger stock for example has seen its two all-time highs under the Biden administration. Despite declining sharply over the last 12 months, the stock is still ahead of where it was during most of the the previous administration.

How long this gun bounce lasts remains to be seen. Biden’s speech on Tuesday will certainly play a part in the industry’s near-term trajectory on Wall Street.

The Street

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