Shares of gun manufacturers soared today as President Obama outlined a series of executive actions meant to expand background checks for firearm sales.
Smith & Wesson rose 11% to close at $25.86, its highest closing price since it began trading more than a decade ago, while Sturm Ruger jumped 7% to $65.54. The broader S&P 500 rose just 0.2% for the day.
Gun stocks tend to rally at any talk of gun control, which often serves as a catalyst for sales. Demand for firearms hit an all-time high in 2013 after the mass shooting at Sandy Hook Elementary School in Newtown, Connecticut — gun buyers became so convinced that a crackdown was approaching that the industry was hit by "panic buying," as Dick's Sporting Goods CEO Ed Stack put it on a conference call in 2014.
"Contrary to what common sense would seem to dictate, the data would suggest that a Democrat in the White House, and more specifically a Democrat campaigning to be in the White House, is very good for the gun industry, at least in the short run," analysts at Wedbush Securities wrote in an October note.
"Although Barack Obama has done nothing (at least so far) to advance the cause of gun control, he has been labeled the 'gun salesman of the decade," the analysts wrote at the time.
Smith & Wesson raised its earnings forecast for the year ending April 30 on Monday night, citing higher than expected sales at its distributors and "strong growth" in background checks for December.
Obama said on Friday that he was looking at measures to fight the nation's "epidemic of gun violence" in his last year in office.
"I believe in the Second Amendment. No matter how many times people try to twist my words. I taught constitutional law, I know a little bit about this," Obama said on Tuesday. "We can find ways to reduce gun violence consistent with the Second Amendment."
