Gun Stocks, Predictably, Climb After Massacre
Mass shootings such as the one that took 14 lives at a southern California social services center sent gun owners to dealers and prompted pawn shops to buy additional firearms. Why? Some people say it's to defend themselves in future attacks, but the bigger reason is a different kind of fear: that politicians will make it more difficult to obtain guns in the future.
That's good news for companies in the business of making firearms, which have benefited for years from the predictable consumer reaction to shootings in places including Colorado, Oregon, Connecticut, and on Dec. 2, California. Criminal background checks—the best proxy for national gun sales—were already on the rise before the latest massacre. Checks were up 7.7 percent in November, compared with a year earlier, according to adjusted government figures published by the National Shooting Sports Foundation, the gun industry's main trade association.
Strong sales translate into boom times for gun maker stock. Smith & Wesson's share price jumped 7.6 percent on Monday to $20.44, an eight-year high, while investors also pushed up Sturm Ruger's stock. S&W shares have doubled this year; Ruger's have climbed 66 percent, to $57.50.
"The No. 1 driver of firearms sales is fear," Brian Ruttenbur, an analyst at BB&T Capital Markets, told Bloomberg News.
People who work in the gun industry refer to it as the "Obama surge," a pattern of strong sales that has persisted since the president took office in 2009. Anxiety about stiffer federal gun control, however, hasn't been matched by action: Even after the Newtown, Conn., elementary school massacre in December 2012, congressional Republicans have thwarted Democratic attempts to enact such restrictions as universal background checks.
Speaking from the Oval Office on Sunday night, Obama urged Congress to block people on federal no-fly lists from buying guns and said he would push to make it more difficult to buy "powerful assault weapons such as the ones that were used in San Bernardino."
Two days earlier, the New York Times called for a far more drastic restriction on semiautomatic, large-capacity, military-style rifles. "Certain kinds of weapons, like the slightly modified combat rifles used in California, and certain kinds of ammunition, must be outlawed for civilian ownership," the Times declared in a front-page editorial, the paper's first in 95 years. "It is possible to define those guns in a clear and effective way," the Times added, "and, yes, it would require Americans who own those kinds of weapons to give them up for the good of their fellow citizens."
Americans own millions of military-style semiautomatic rifles, one of the most common being the AR-15. While it's a safe bet that some of those gun owners wouldn't voluntarily surrender their arms, forestalling that kind of confrontation is the reality that a Republican-controlled Congress is unlikely to pass a ban on new assault weapon sales, let alone on ownership.
In the face of this standoff, the U.S. Supreme Court has studiously avoided the fray, ignoring pleas from gun-rights advocates to expand Second Amendment protections it defined in 2008 and 2010.
The high court's ambivalence was in evidence this week. On Monday, the justices declined to hear a constitutional challenge to a local law in a Chicago suburb that bans assault weapons and large-capacity magazines. They left undisturbed a lower court ruling that said Highland Park, Ill., had not infringed the Second Amendment's protection of the right to "keep and bear arms."
The lower court said residents of the town had other means to protect themselves, including handguns.