In the wake of the deadliest shooting in modern U.S. history, gun stocks are getting their usual post-bloodshed pop Monday.
The attack on the Route 91 Harvest Music Festival in Las Vegas left at least 59 people dead and 527 injured.
It also lifted the price of shares in American Outdoor Brands — formerly Smith & Wesson — and fellow gunmaker Sturm, Ruger & Company was by more than 3 percent Monday. They were up as high as 7 percent and 8 percent earlier, before giving back some gains. (The broader market, as measured by the S&P 500, is up about 0.3 percent.)
Stocks in gun companies have been known to rise in the aftermath of American mass killings, as the killings can lead to an increase in chatter surrounding the imposition of new laws restricting gun sales. And while Congress hasn’t passed any new tough new gun laws since 1994’s assault weapons ban (since allowed to expire), the mere mention of new restrictions has been enough to spur a short-term rise in gun sales, and therefore profits for gun makers. It’s the expectation of those profits that generate the boost in share prices for the companies in the stock market. At least that’s the theory.
But it’s not always the case. Arguably the closest the U.S. came recently to actually imposing new gun legislation would have been in the immediate aftermath of the Dec. 14, 2012 shooting at Sandy Hook Elementary School in Connecticut, when a 20-year old man mowed down 20 first-graders and six others with a machine gun. Then-President Barack Obama tearfully promised meaningful action in the wake of the killings. And gun stocks actually fell.
But Obama’s push for tougher gun laws fell apart in April 2013, when moderate Senate Democrats balked the passing a bill calling for broader background checks.
If 20 dead first-graders, and a White House and Senate controlled by Democrats didn’t result in new gun regulations back then, it’s hard to imagine that the 59 dead in Las Vegas will when Republicans control the levers of power in Washington.
But gun stocks are rising nonetheless.