The shares of private-prison providers jumped on Friday after the Justice Department signalled its support for their use by the government.
Last August, Sally Yates, the former deputy attorney general, directed the Bureau of Prisons to withdraw or decline contracts for private-prison operators at expiry. She said the facilities compared poorly to federally-run prisons.
But in a memo issued on Thursday, Attorney General Jeff Sessions said the directive “impaired the Bureau’s ability to meet the future needs of the federal correctional system.”
CoreCivic, the largest publicly traded prison provider formerly known as Corrections Corporation of America, rallied 3%. Geo Group gained as much as 3.6% to a record high near noon in New York.
Prison stocks have been on a tear since President Donald Trump won the election, as investors anticipated that the new administration would rescind Yates’ directive. CoreCivic’s stock crashed 50% right after the initial memo was released last August.
CoreCivic has surged 149% since the election, while Geo Group has risen 105%.