The 11 Official Stock Market Sectors

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All sectors (including the S&P 500 Index) are ranked within the heatmap, with green being the highest percent and red being the lowest percent. The heatmap helps identify S&P sectors whose stocks are over or underperforming based on 5 different moving averages. News, commentary, market data and research reports atfx broker review are from third-party sources unaffiliated with Fidelity, unless otherwise noted, and are provided for informational purposes only. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Why trade stock market sectors?

That’s why you need to diversify your investments and make sure you’re spread into different sectors and increasing your exposure to some more defensive sectors. They operate apartments, malls, offices, and senior living communities. If you have a relative in a nursing home, chances are the company operating that community is publicly traded in the real estate sector. The financial sector consists of banks, insurance companies, and real estate companies. The consumer staples sector is considered a defensive sector because it’s generally resilient in the event of an economic downturn.

Companies in the health care sector provide medical services, make medical equipment, research and produce pharmaceuticals, sell health insurance, and otherwise facilitate health care for individuals. Despite dips in the stock market over the past three years, health care sector gains outpaced those of the S&P 500. Second, market sectors can be affected differently by market volatility and where the economy is in the business cycle. Financials and real estate, for example, may do better in the early stages of the business cycle versus the later stages. It’s worth taking an in-depth look at stock market sectors to help guide your investment strategy. We’ll explore each stock market sector, walk through a few of the largest and well-known companies within each sector as well as various industry groups.

Instead, it’s primarily dominated by oil and gas, along with coal and other consumable fuels. The materials sector includes companies that provide various goods for use in manufacturing and other applications. The communication services sector consists prime xbt of companies that keep people connected. The more exciting part of the sector includes media, entertainment, and interactive media & services companies. Netflix Inc. and Walt Disney Co. are considered part of the communication services sector.

Unlike consumer discretionary companies, consumer staples companies make products that people buy on a regular basis. Discretionary products are products that people don’t need to purchase. The industrials sector encompasses a wide range of different businesses that generally involve the use of heavy equipment.

  • The notion of putting all your eggs into one basket comes to mind when buying individual stocks, which means you’ll have to do your research before you invest.
  • In addition, this content may include third-party advertisements; Titan has not reviewed such advertisements and does not endorse any advertising content contained therein.
  • The Global Industry Classification Standard divides the market into 11 sectors, composed of 24 industry groups and 69 industries.
  • To help you understand why tracking different stock sectors performance is important, let me give you an example.
  • The S&P sectors, or Global Industry Classification Standard , organize companies based on their primary business activities.

The energy sector covers companies that do business in the oil and natural gas industry. It includes oil and gas exploration and production companies, as well as producers of other consumable fuels like coal and ethanol. The energy sector also includes the related businesses that provide equipment, materials, and services to oil and gas producers. Oddly enough, though, it doesn’t include many renewable energy companies, which instead are considered utilities.

Trading Stocks

The 11 stock market sectors play an important role in the U.S. stock market. And today it’s easier than ever for investors to gain exposure to an entire portfolio without investing in individual companies. The stock market sectors are created by the Global Industry Classification Standard , which was developed by S&P Dow Jones Indices and MSCI in 1999. The structure is used globally and is the basis for many mutual funds and exchange-traded funds . The consumer staples sector includes businesses that produce and distribute products that are regularly purchased by all consumers.

11 sectors of the stock market

Finally, it’s also important to keep an eye on market trends and the economy as a whole. As mentioned, some sectors may be more in favor during certain periods of the business cycle than others. U.S. Sectors & Industries Performance is represented by the S&P 500 GICS® indices.

Stock Market Sector FAQs

“While some investors are capable of predicting which sector is going to outperform another, it’s hard to do that,” Campos said. If you want to start building a better foundation for approaching the markets, sign up for my 30-Day Bootcamp. Let’s say last year you decided to invest in five stocks and hold them for the duration of 2019. And for all five stocks you chose energy stocks because you hypothesized that they would have a good year. One prominent company in this sector is Simon Property Group, which operates malls.

11 sectors of the stock market

These businesses engage in a wide range of services, such as exploring, drilling, refining, transporting, manufacturing equipment, and marketing. The energy sector experiences volatility and performs well when oil prices are high. So although energy vastly underperformed the S&P 500 in 2020, the forex algorithmic trading sector turned around and produced the highest returns since then. Businesses in this sector provide financial services to commercial and retail customers. Generally, that includes brokerage firms along with companies involved in banking, money markets, mortgages, investing, and insurance.

How to read stock charts: Learn the basics

Its market capitalization is more than double that of the industrials sector, which has more than twice as many underlying industries. GICS is an industry classification system developed by Standard & Poor’s in collaboration with Morgan Stanley Capital International . S&P uses GICS to determine the market segment to which a company is assigned. A company is assigned to a single GICS industry according to the definition of its principal business activity as determined by Standard & Poor’s and MSCI. Revenues are a significant factor in defining principal business activity; however, earnings analysis and market perception are also important criteria for classification.

But “green” energy offers the promise of higher returns, although with higher risk. The consumer discretionary sector includes companies that produce cars, durable goods, clothing and leisure equipment. It also includes restaurants, hotels and consumer retailing, among others. This sector is sensitive to economic cycles, so when the economy grows, these companies tend to grow much more quickly, though when it slows, this industry typically slows even more. The information technology sector includes companies that make software, build IT equipment and hardware, implement technological solutions, and produce semiconductor chips. Some of the companies in this sector also make communications equipment such as mobile phones and laptops.

This includes food and beverage companies, household product providers, and personal product providers. Consumer staple companies are well known, since people see their products in stores regularly. For example, Procter & Gamble is a famous company within this sector, which produces bleach and laundry detergent under brand names such as Dawn and Tide. Another example is Kroger, which is the largest supermarket chain in the U.S.

What Are Stock Market Sectors?

While working in college admission, Melissa Brock pursued a freelance writing and editing career. She currently works as a full-time freelance writer and financial editor covering higher education, investing, personal finance, mortgages, college savings, insurance, and more. The stock market is often divided into eleven sectors, with each sector having unique dynamics affecting its profitability.

The U.S. stock market includes thousands of companies, and it’s easy to get analysis paralysis at the thought of choosing which to invest in. To help simplify things a bit for investors, the stock market is broken down into several different sectors that include companies with similar characteristics. Given the vast array of other sectors and niches served and improved by information technology companies, inclusion in this sector can be somewhat subjective. But broadly speaking, regardless of the target sector niches of their products and services, information technology stocks either provide or enable technological solutions.

What are the 11 different stock market sectors?

© 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. Companies that explore for, develop and process raw materials make up the materials or basic materials sector. Commodities such as coal, lumber, steel, precious metals and chemicals are essential building blocks to manufacture everyday items.

AvalonBay Communities and Aimco are some of the larger apartment operators. Since these companies operate regionally (i.e., there isn’t one national electric or water provider in the U.S.) you’d likely only recognize your local utility. That’s because banks give out loans and mortgages, and the higher interest rates all go to the banks. Boeing, 3M, Honeywell, UPS, Delta, Lockheed Martin, Deere, and Caterpillar — they’re all industrials. The defense, machinery, aerospace, airlines, construction, and manufacturing companies are in here.

Certain information contained in here has been obtained from third-party sources. In addition, this content may include third-party advertisements; Titan has not reviewed such advertisements and does not endorse any advertising content contained therein. A 1-year chart of the S&P 500 Index, showing percent comparisons against the 11 S&P Sectors is shown at the top of the page.

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