The firearms sector is lower on Election Day as investors try to digest potential implications for the stocks.
The sector has a long history of swinging wildly around elections and speculation over potential regulatory changes or legal challenges. Typically, traders have bet on a short-term gun and ammunition demand burst if the perception is that gun laws could be tightened. This year, there are some specific votes on gun rights. In Iowa, an initiative proposes enshrining gun rights is in an amendment to the state constitution that declares that residents’ ability to keep and bear arms shall not be infringed. Meanwhile, in Oregon voters will weigh a measure that would require people trying to obtain a permit to pass a background check is seen as more restrictive for gun buyers.
Where does gun demand stand? "With two more months to go before year-end, this calendar year’s total unit sales are expected to come in at somewhat less than 18 million units, the highest ever save for the 2020 and 2021 covid-19 pandemic years,” said Small Arms Analytics & Forecasting Chief Economist Jurgen Brauer. "In terms of firearms purchases adjusted for U.S. population growth, however, this would about match the per capita level for 2016," he added.
Broad market averages were all higher at 1:30 p.m. on Tuesday. However, gun-related stocks like Smith & Wesson ( NASDAQ: SWBI ) -1.45% , Sturm, Ruger & Company ( RGR ) -0.53% , Vista Outdoor ( VSTO ) -2.15% , Sportsman's Warehouse Holdings ( SPWH ) -0.38% , and AMMO ( POWW ) -1.85% were in negative territory.
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Election day means traders are watching firearm-related stocks for any recoil action