A Guide to the 11 Market Sectors


Standard & Poor’s 500 (S&P 500) Index is an unmanaged market-weighted index of 500 of the nation’s largest stocks from a broad variety of industries. The S&P 500 represents about 80% of tokenexus the total market value of all stocks on the New York Stock Exchange. Market-weighted means that component stocks are weighted according to the total value of their outstanding shares.

11 sectors of the stock market

You’ve likely heard of many of the companies in this sector because they sell products to you. They include Walmart, Coca-Cola, Procter & Gamble, Costco, Kraft Heinz, Estée Lauder, and many more. Materials companies usually operate in the business-to-business trading dax futures space, meaning they sell their products to other companies. They provide the key supplies that go into the products that you and I purchase. The basic materials sector stocks are chemical, construction materials, packaging, metals, and paper.

Contributing Author: Dividend Stocks, Retirement

We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. He oversees editorial coverage of banking, investing, the economy and all things money. Investing in Tech Stocks This vast sector is composed of some of the most valuable companies in the world. Investing in Financial Stocks The financial sector is made up of more than just banks. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Some of the largest industrial companies in the world include Boeing , Honeywell , and Union Pacific .

11 sectors of the stock market

The European, Asian, and Canadian stock markets have the same sectors as the U.S. stock market. This similarity gives investors the opportunity to compare stock market sectors across countries. If you are interested in a certain sector but are not ready to invest in a specific company within that sector, you can still participate in sector investing! Seek out lower-risk investments like ETFs and mutual funds that are specifically tied to a sector. Sector investing plays an increasingly important role in the strategies that we as investors use today.

Consumer Discretionary

The real estate sector consists mostly of companies that own, sell, lease, build, develop, operate and/or manage property. These businesses can range from homebuilders and construction companies to brokers and office management companies and landlords. These market sectors help to comprise benchmark indices such as the S&P 500 Index, which is a widely accepted measure of the performance of the stock market and the economy. The S&P 500 contains the largest and most dominant businesses in the country.

Cannabis companies are a new, but rapidly growing, part of the health care sector. Currently, the more well-known ones include Canopy Growth Corp. and Aurora Cannabis, with market caps of $23 billion and $12 billion, respectively. The S&P sectors constitute a method of sorting publicly traded companies into 11 sectors and 24 industry groups. Created by Standard & Poor’s (S&P) and Morgan Stanely Capital International , they are also known as the Global Industry Classification Standard . S&P sorts companies into sectors based on their primary business activity.

Uses of Breaking Down into Sectors

The utilities sector is made up of those companies that deliver energy sources to consumers. It includes electric and gas utilities, water utilities, and many renewable energy companies. The information technology sector includes a wide range of companies involved in the manufacturing, distribution, market, and more of both hardware and software. Some of the most common components within this sector include IT services, software, communication equipment, hardware, electrical equipment, and more.

Sign Up NowGet this delivered to your inbox, and more info about our products and services. This chart compares the performance of the overall S&P 500 Index to the performance of the 11 sectors over one-, five-, and 10-year time frames. Dan is a veteran writer and editor specializing in financial news, market education, and public relations. Earlier in his career, he spent nearly a decade covering corporate news and markets for Dow Jones Newswires, with his articles frequently appearing in The Wall Street Journal and Barron’s.

  • U.S. Sectors & Industries Performance is represented by the S&P 500 GICS® indices.
  • Mutual funds and ETFs are investment instruments comprised of large baskets of stocks that concentrate on a common theme or market — in this case, any given sector you want exposure to.
  • Here’s a look at each sector, along with some of the largest and best known companies in each.
  • This compensation may impact how, where and in what order products appear.
  • The information technology – IT – sector consists of companies that develop or distribute technological items or services, and includes internet companies.

The technology sector includes multiple sub-sectors and industries, from semi-conductor producers to software and hardware providers, as well as internet stocks and cloud computing. Here are the 11 stock market sectors, starting with the highest-growth stock sector from 2017 to 2022 and descending in order. If you’re trying to decide which sectors to invest in based on returns, then you might use sectors that outperformed the S&P as a baseline. So your list would include consumer discretionary, healthcare and information technology. Based on the numbers, it’s immediately clear that information technology is the largest market sector based on market capitalization. This sector covers six industries, including software, technology, hardware, semiconductors and IT services.

The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services. The Business Cycle Approach to Sector Investing provides details on how you can potentially take advantage of opportunities that arise due to the relative performance of sectors in each phase. Enter your email address below and we’ll send you MarketBeat’s list of seven best retirement stocks and why they should be in your portfolio. Click the link below and we’ll send you MarketBeat’s list of seven best retirement stocks and why they should be in your portfolio.

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The Global Industry Classification Standard divides the market into 11 sectors, composed of 24 industry groups and 69 industries. The commonly-used system helps shape how ETFs and mutual funds are constructed. The utilities sector includes companies that provide customers with utility services, such as water, electric, and gas. Since utilities are considered to be essentials for daily living, the utilities sector is also generally seen as a defensive sector. The real estate sector includes companies that develop or manage real estate property. This sector also includes real estate investment trusts , which are companies that purchase multiple income-producing assets, such as office buildings and hotels.

The communication services sector includes telecommunication and media companies, entertainment companies and those producing content and interactive games. This sector can offer significant growth opportunities as the world moves more online, but older companies face significant challenges from more dynamic entrants. A stock market sector is a group of stocks that have a lot in common with each other, usually because they are in similar industries.

These are considered defensive sectors because people will always need what these companies sell. They’re subject to heavy government regulation, but they’re bdswiss broker review often safer bets in a shaky market. Many view companies in the healthcare sector as good and safer plays because people will always need medical care.

Examples of large communication services companies include Alphabet and AT&T . By tracking sectors, you can learn a lot about the performance of the market and the entire economy. Each firm is grouped into a sector, which is then further broken down by industry group, industry, and sub-industry.

Some of the largest companies in the consumer staples sector are Procter & Gamble, Walmart, and Coca-Cola. “For practically any investor, I would advise the total US stock market fund as the only U.S. stock investment you need,” Campos said. Granted, past performance doesn’t predict future results … but remember, the trend is your friend. If the trend is down, you probably don’t want to be buying and hoping it turns around. Start with a bird’s-eye view … look at the yearly performance of each sector, and then narrow to the monthly performance, and then daily performance.

References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. The Global Industry Classification Standard is a system of identifying publicly traded companies according to their business operations. The GISC was developed by S&P Dow Jones Indices and Morgan Stanley Capital International in 1999. It now serves as the basis for many mutual funds and exchange-traded funds . When you diversify across different sectors and industries, you’re effectively spreading out risk. If one sector underperforms, for example, that could be balanced out by a sector that suddenly takes off.