The Strategist

Stocks of US Weapons Companies Jumped in Price Triggered by Terror


12/08/2015 - 14:34



Stocks of US manufacturers of small arms showed significant growth despite the general decline in the stock market. The reason for the weapons rally was the latest mass shooting that occurred in the US in early December. The incident is qualified as a terrorist act.



M&R Glasgow
M&R Glasgow
On Monday, December 7, stock indices Dow Jones, S&P 500 and NASDAQ showed a negative trend, losing an average of about 1%.

Manufacturers of small arms have become one of the few sectors, which appeared in the black. In particular, stocks of companies such as Smith & Wesson and Sturm Ruger increased by 6.9% and 5.6%, respectively.

Surge in investor interest in this sector was triggered by expectations of growth in sales of small arms in the short term after the mass shooting in the United States.

December 2, 2015 in San Bernardino (CA), a couple - Syed Rizwan Farook and Tashfeen Malik (born in Pakistan, arrived in the US from Saudi Arabia in 2014) – opened mass shooting in the center for disabled people Inland Regional Center.

According to official data, the massacre resulted in 14 people killed, another 17 wounded.

US media reported that the attackers (destroyed during the raid) had been involved in the terrorist group "Islamic State".

The Federal Bureau of Investigation said that they are investigating the incident as a terrorist act.

Shortly after the incident, President Barack Obama addressed to the nation with an emergency appeal. Besides other things, he also said that the incident was a terrorist attack, and urged Americans not to succumb to fear. Mr. Obama, in particular, said that "freedom is stronger than fear."

However, some US media pointed out that Obama's rhetoric about freedom could not have managed to reassure San Bernardino’s residents.

The shooting in San Bernardino became the most massive occurrence of such kind since December 2012, when a lone shooter killed 26 people in the city of Newtown (Conn). Two months before the massacre in San Bernardino, in October 2015, happened a shooting in the city of Roseburg (Oregon); 13 were killed and 20 others - wounded.

Virtually every such incident with mass executions of people in the United States has a powerful incentive to increase purchases of small arms among the American population.

In general, according to Swiss research organization Small Arms Survey, the US is one of the world leaders in the number of weapons in the hands of the population: according to statistics, 88 out of 100 Americans keep firearms at home.

source: bloomberg.com