Shares of gunmakers Smith & Wesson Holdings Corp (SWHC.O) and Sturm Ruger Inc (RGR.N) plunged for a second day following the Newtown school massacre and after private equity firm Cerberus Capital Management said it would sell gunmaker Freedom Group.
Cerberus, under pressure from major investor California State Teachers' Retirement System, said it would sell its interests in gunmaker Freedom Group, whose Bushmaster AR-15 rifle was used in the Connecticut shooting.
Smith & Wesson shares were down 8 percent at $7.92 in heavy trading on the Nasdaq, while Strum Ruger shares were off 5 percent at $41.74 on the New York Stock Exchange.
Both Smith & Wesson and Sturm Ruger enjoyed record sales in the run-up to the U.S. presidential election in November, in part on expectations that a win by Barack Obama would result in new gun control measures.
Shares in gun retailers Dick's Sporting Goods Inc (DKS.N) and Cabela's Inc (CAB.N) also opened lower on Tuesday but recovered most of their losses later in the morning.
Dick's pulled all guns from the shelves of its store nearest to Newtown and suspended the sale of modern sporting rifles at all its stores nationwide "out of respect for the victims and their families, during this time of national mourning."
(This story was corrected to fix the name of the rifle in the second paragraph to Bushmaster AR-15 from BushAR 15)