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Gunmaker Stocks Jump as Obama Considers New Limits on Weapons

Monday, 04 Jan 2016 01:09 PM

Smith & Wesson Holding Corp. and Sturm Ruger & Co., the two largest U.S. gunmakers, rose the most in three weeks after President Barack Obama pledged this weekend to take action to curb gun violence.

“When the government attempts to tighten gun regulation, near-term sales of firearms tend to go up,” said Rommel Dionisio, an analyst at Wunderlich Securities Inc. who covers Smith & Wesson. “Consumers are fearful of a certain class of firearms being restricted or legislated against.”

Demand for firearms climbed in December on speculation about further gun control following the November attacks in Paris and after two gunmen on Dec. 2 killed 14 people in San Bernardino, California. Background checks by the Federal Bureau of Investigation, the best indicator for gun sales, jumped about 40 percent in December from a year earlier, Dionisio said.

Smith & Wesson rose 6 percent to $23.30 at 11:55 a.m. in New York. The stock advanced as much as 7.3 percent, the biggest intraday increase since Dec. 10. Sturm Ruger gained 2.6 percent to $61.16 and climbed as much as 5.4 percent, also the biggest such jump since Dec. 10. The Standard & Poor’s 500 Index dropped 2.2 percent as stocks sank worldwide.

How long the gunmakers’ sales surge will continue depends on Obama’s actions, Dionisio said. The president is scheduled to appear Thursday at a town-hall event at George Mason University in Fairfax, Virginia, to discuss how to address gun violence. One move could be to require background checks for sales at gun shows, Dionisio said.

“That in and of itself is not that significant of an action, but the investment community believes that could be the first of several steps the administration might take,” he said.

 

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Smith Wesson Holding Corp. and Sturm Ruger Co., the two largest U.S. gunmakers, rose the most in three weeks after President Barack Obama pledged this weekend to take action to curb gun violence."When the government attempts to tighten gun regulation, near-term sales of...
gunmaker, stocks, rise
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2016-09-04
Monday, 04 Jan 2016 01:09 PM
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