Clinton’s call for gun crackdown lifts firearm manufacturers

October 5, 2015

Hillary Clinton’s call on Monday for tougher gun control rules might spook gun afficionados, but her comments gave a boost to shares of firearm manufacturers.

Shares in Smith & Wesson were up 7.3 percent Monday afternoon at $17.81, the biggest daily increase in share price in more than a month. Competitor Sturm Ruger & Co’s shares rose 2.6 percent to $57.93, its biggest jump since late September.

Clinton, the Democratic front-runner a year ahead of the November 2016 presidential election, called for expanding background checks and making it easier to hold negligent manufacturers and dealers accountable.

If elected, she warned, she would use presidential executive authority to crack down on guns if Congress refused to act. Clinton’s comments came after a gunman killed nine people last week on a community college campus in Oregon.

“How many people have to die before we actually act, before we come together as a nation?” Clinton said.

While her comments were likely to antagonize gun lobbyists and pro-gun politicians in Washington, they helped drive up shares in gun makers, Brian Ruttenbur of BB&T Capital Markets said.

Big pushes for new gun restrictions in recent years have caused public demand for firearms to jump. That is because gun sales are often driven by fear, Ruttenbur said.

“For example, if a politician was threatening to ban, I don’t know, ironing boards, even though you may not iron…you go out and get an ironing board because you’re afraid you won’t be able to get one in the future,” Ruttenbur said.

“That’s been the same thing that’s happened here.”

U.S. President Barack Obama has sought to beef up federal gun restrictions in response to several mass shootings while he has been in office, but he has failed to get the U.S. Congress on board. Nonetheless, firearm sales have spiked since he took office, Ruttenbur said.

He said gun makers’ stocks also benefited this week from FBI data showing firearm background checks up in September compared to a year earlier. That’s an indication of rising demand for guns in the future.

“People are buying handguns like crazy,” Ruttenbur said.

Shayanne Roberts looks at rifles in the trade booth area during the National Rifle Association’s annual meeting in Nashville, Tennessee April 11, 2015. REUTERS/Harrison McClary

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“That is because gun sales are often driven by fear, Ruttenbur said.”

Yes, those who purchase guns do frequently seem driven by fear.

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