The 11 Sectors of the Stock Market

Now she’s able to bring that experience to Investment U readers by providing in-depth research on IPO and investing opportunities. These links are provided by Fidelity Brokerage Services LLC ("FBS") for educational and informational purposes only. Barry D. Moore is a Certified Market Technical Analyst with the International Federation of Technical Analysts with over 20 years of investing experience. Previous lives include holding key executive roles in Silicon Valley corporations. Understanding the 11 Stock Sectors can show you where and how to invest.

11 sectors of the stock market

Our pro investing classes are the perfect way to learn stock investing. You will learn everything you need to know about financial analysis, charts, stock screening, and portfolio building so you can start building wealth today. The SCHH invests in office building companies such as the American Tower Corporation , ProLogis , and the Digital Realty Trust .

Energy Sector

The energy sector includes some of the largest energy companies in the world, such as Exxon Mobil and Chevron . A stock sector is a collection of publicly-traded companies that work within the same general field of business—healthcare, energy, real estate, etc. Without the fruits of this sector, the human species would essentially go extinct.

There are 11 stock market sectors, according to the Global Industry Classification Standard, or GICS, which is an industry taxonomy developed in 1999 by MSCI and Standard & Poor's. Within the entire GICS structure, there are 11 sectors, 24 industry groups, 69 industries and 158 sub-industries into which all major public companies are categorized. A ui vs ux vs product design company with a core business that involves taking some raw material or natural resource and, through a process, converting it into something more useful is almost always labeled a materials stock. Many chemical companies, mining companies, metals businesses and logging companies are in the materials sector, as are some oil and natural gas stocks.

11 sectors of the stock market

GICS was developed in 1999 by MSCI and Standard & Poor’s, two giants in the financial industry. Media, entertainment and communications companies form the backbone of the telecom sector. Here, ig forex broker review you’ll encounter Internet service providers, streaming services, cable companies and more. With the advent of the Internet, this sector was forced to evolve alongside our consumption habits.

That’s because the sector consists of biotechnology companies, hospital management firms, medical device manufacturers, and many others. In general, the sector is considered to be both a growth opportunity and defensive play since people will require medical aid in both good and bad times. Since it’s the second-largest industry, it’s nearly impossible to have a diversified portfolio without any health care stocks or ETFs in it. The materials sector includes companies that produce chemicals, glass, paper, forestry products, metals, packaging, construction materials and steel. If you’re a stock market investor and want to broadly diversify your portfolio, you’ll need to own stock in companies across many different parts of the economy.

S&P Futures

Below you can find a description of each of the 11 stock market sectors, as well as the largest companies within them. An S&P 500 or total stock market index fund can help you add all 11 stock market sectors to your portfolio in a single investment. You don’t have to worry about guessing which industry will perform best. Are you wondering how the different stock market sectors affect your portfolio? The answer is to pick a total market fund that can help you get all 11 sectors into your portfolio. As the name suggests, this stock market sector includes companies that own, develop, lease, and manage land and property.

Many value investors buy Communications Sector Stocks because some generate enormous amounts of what Warren Buffett calls float. Float is a steady stream of cash a company generates from subscription payments. The Communications Stock Sector is the new name for the Telecommunications Stock Sector.

Stock Sector 2, 5 & 10-Year Performance vs. S&P 500

The communication services sector tends to follow the general market. Generally, there are strong gains during a bull market, but a bear market can lead to severe losses. Also, some companies in this sector may struggle as technology advances and they’re forced to adapt. How should everyday investors leverage sector stocks to expand their own investment portfolio opportunities?

Thus, Information Technology Sector companies such as Apple and Alphabet have replaced Exxon-Mobil and other oil companies as Blue Chip leaders. The easiest way to trade the Basic Materials Sector is to identify profitable Basic Materials companies. Identifying Basic Materials companies can be tough because many industrial and energy companies supply basic materials. Stock Sectors are a means of breaking down and simplifying an enormous and complex stock market. Analysts and portfolio managers use the GICS sector classification to enable better portfolio structuring, risk management, and reporting. provides guides and information on a range of products and services.

  • GICS is an industry classification system developed by Standard & Poor's in collaboration with Morgan Stanley Capital International .
  • What you need to know about investing in the leading indicator for the overall US stock market.
  • Plus, Disney operates video-streaming services, resorts, theme parks, a consumer products business, and movie studios.
  • A former Wall Street trader, he is the author of the books CNBC’s Creating Wealth and The Career Survival Guide.

We categorize stocks into sectors to make it easy to compare companies that have similar business models. When investing, you can choose from stocks within the sectors that interest you. Sectors also make it easier to compare which stocks are making the most money. This helps you make decisions about what your next investments will be. The other encompasses healthcare equipment and services, including surgical supplies, medical diagnostic tools, and health insurance.

These companies typically sell to other businesses at the head of the supply chain. They provide manufacturing staples like oil, natural gas, metal, paper and chemicals. A total market index fund is a great way to keep your portfolio diversified, while also getting a piece of the 500 largest companies of the U.S. stock market. The consumer discretionary sector consists of retailers, media companies, consumer service providers, apparel companies and consumer durables.

Chart Performance

As part of your investment research, consider how one sector may play off another and how that might translate to returns. If you’re investing in sector funds or ETFs, pay attention to the expense ratio for each fund and balance that against earnings potential. When deciding which market sectors to invest in, it’s important to look beyond size and consider how well one sector versus another performs.

Industrials Sector

As a result, the performance of these companies in the industrial sector often moves along with the economic cycles. Within each sector, there are a number of different publicly traded stocks that operate in the same broad area. If you’re an investor and want to diversify your portfolio expansively, you’ll then need to own companies across the market. Consider talking to a financial advisor about which market sectors to focus your portfolio on.

Real Estate: 2 industries

The advantage of the iShares Global Industrials ETF is that it offers a snapshot of global industrial performance and the world’s economy. The ARKG invests in emerging biotechnology research companies such as Compugen . The ARK Genomic Revolution’s managers try to identify biotech companies developing products for fast-growing diseases. Over the past century, the US stock market has had 6 major crashes that have caused investors to lose trillions of dollars. Revenues and profits at Consumer Staples companies can show how much money people have.

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The financial sector includes banks, insurance providers and real estate firms. Revenue generated in this sector is directly correlated with interest rates on mortgages and other loans. 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. The industrials sector includes companies across a wide range of different goods and services. A stock market sector is a group of public companies that share similar business activities, products and services, or characteristics.

The term discretionary is key here as it tells you that these companies sell goods that people purchase with their disposable income, rather than day-to-day necessities. 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. So it’s a big deal when the GICS classification changes or a company is added to or removed from the schema.

Utilities have a sector because the government regulates utilities more extensively than normal companies. In the United States, special state agencies and cities regulate many utilities. Even the investment bank Goldman Sachs can be considered a technology company.

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