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There are 11 sectors, each divided further into industry groups, industries and sub-industries. Companies in the consumer staples sector are businesses that sell products considered necessary and essential to life. Since they are less sensitive to economic cycles, they are also referred to as consumer defensive companies. Examples of the consumer staples sector stocks include Clorox , Coca-Cola , General Mills , Phillip Morris and Proctor & Gamble . Trading within stock market sectors enables investors to gain exposure to industries that are expected to benefit from particular market-moving factors. Trading on stock market sectors rather than individual companies can reduce the risk of investments completely failing as your risk is spread out across many companies.
A sector is a slice of the stock market that represents a certain part of the economy or industry. Knowing how these sectors work can guide the selection ofstocks, mutual funds, exchange-traded funds and other investments. While an investment advisor can provide 1 min forex scalping strategy with adx and bollinger bands a more in-depth look at the characteristics of various market sectors, this guide provides a primer on the stock market’s sectors. The consumer discretionary sector covers goods and services for which consumer demand depends upon consumer financial status.
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Covers companies engaged in the exploration and production, refining and marketing, and storage and transportation of oil and gas, and coal and consumable fuels. Also includes companies that offer oil and gas equipment and services. 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.
Access to Electronic Services may be limited or unavailable during periods of peak demand, market volatility, systems upgrade, maintenance, or for other reasons. A good way to describe the consumer discretionary sector is luxury. It includes industries like automobiles, hotels and restaurants. Companies market their products to consumers, and consumers buy those products.
So just because a market sector has done well up to now doesn’t necessarily guarantee that it will deliver the same or a higher level of returns in the future. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. The framework created by the Global Industry Classification Standard has four tiers that break companies into 11 sectors, 24 industry groups, 69 industries, and 158 sub-industries. One alternative to the GICS schema is the Industry Classification Benchmark, or ICB. The ICB was developed in 2005 by Dow Jones and FTSE, and divides the market into 11 industries, 20 supersectors and then further into sectors and subsectors.
Also, check out ourtrading serviceto take trading to the next level. We go over what’s happening every day when we stream in how do real estate brokers get paid the pre-market and in our trade rooms. Clothing companies, media companies, and retailers make up the discretionary sector.
How many stock market sectors are there?
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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. Below are the 11 sector classifications, including a description of the companies in the sector as well as a few of the largest or most well-known companies.
What are the S&P Sectors?
In this article, we’ll take a look at the 11 sectors of the stock market and various ETFs that can be used to gain exposure to them. Some of the largest companies in the real estate sector are American Tower Corp. and Simon Property Group. Some of the largest companies in the consumer services sector are Facebook and Alphabet .
- You may think a certain stock is a good purchase, but until you research its rivals, it’s difficult to know for sure.
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- Companies in the sector are generally sensitive to economic cycles.
- Includes companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, and metals, minerals and mining companies, including producers of steel.
For example, some sectors are considered more sensitive to interest rate movements – financials, real estate and consumer discretionary. As one of the most closely watched stock indexes, there are dozens of options for investing in the S&P 500—if not hundreds. Once you open a brokerage account, you can choose between any of the ETFs, mutual funds, or futures contracts that track the S&P 500.
What is the GICS system and why is it important?
By tracking sectors, you can learn a lot about the performance of the market and the entire economy. These groupings help investors clearly track a given industry’s market performance through time. On any trading day, or over the course of a year, some sectors may climb while others sink. Seasoned investors typically have at least some idea what drives those different moves, even if they don’t necessarily become experts on every sector.
- The stock market is often divided into eleven sectors, with each sector having unique dynamics affecting its profitability.
- By understanding them, you can better know where you want to invest your money.
- This could be oil field exploration, refining fossil fuels or marketing.
- Outbreaks of infectious diseases, such as the coronavirus pandemic, can positively impact the health care sector by increasing investment for research and development and demand for treatments.
- The information technology sector is home to the hardware, software, computer equipment, and IT services operations that make it possible for you to be reading this right now.
- Also included is a popular index fund that allows you to invest in the sector with a low expense ratio.
In general, the sector generates consistent recurring income by charging consumers and businesses that provide higher-than-average dividend yields. 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. It’s worth noting that real estate is the newest sector to be added to the list. It wasn’t until 2016 that real estate was officially recognized as its own market sector. Previously, real estate investments had been grouped in with the financials sector on the S&P 500.
They are also companies that provide us content, such as information, advertising, entertainment, news and social media. Examples of the communication services sector stocks include Alphabet , AT&T , Comcast , Facebook , Twitter and Verizon . The health care sector includes companies that provide health care services, as well as health care equipment and technology. It includes companies at all stages of pharmaceutical and biotech research, development and production. This sector can be dynamic and exhibits above-trend growth, with some very quickly growing companies.
It’s why it’s an important category to invest in and keep an eye on in bearish times. A stock sectors list helps you find stocks that trade better in markets like a bear market. Whether you’re a day trader or an investor, you need to know what stocks are trading the best at different times. The market is filled with so many stocks that they’ve been broken down into a stock sectors list. Like the Consumer Staples sector, they generate steady returns regardless of market-moving factors, and as such, can be used to defend portfolios against economic downturns. In this sense, Utilities companies are typically value stocks , although current trends towards clean energy also give the sector significant growth potential.
In that scenario, it would seem that industrials would be the largest sector overall while energy and real estate would be the smallest since they only cover two industries apiece. A better way to measure sector size, however, is using market capitalization. The consumer discretionary sector is made up of those companies that produce goods that consumers want but don’t necessarily need. These companies tend to be cyclical since they do well when the economy is booming but not when the economy is down. The materials sector is made up of companies that manufacture and market goods used in manufacturing. Included in the materials sector are companies that produce chemicals, construction materials, containers & packaging, metals, paper, and forest products.
A cyclical super sector is a grouping of market sectors that include Materials, Consumer Discretionary, Financials and Real Estate. When the economy is prosperous, these industries tend to expand and when the economy is in a downturn, can i sue my financial advisor these industries tend to shrink. In general, the stocks in these industries have a beta of greater than 1. A defensive super sector is a grouping of market sectors that include Health Care, Consumer Staples and Utilities.
Financials is another sector that rates as one of the largest, based on market capitalization. Under the financials umbrella, the biggest industry representation is banks, followed by capital markets and insurance. Healthcare, consumer discretionary and communication services round out the top list for the largest market sectors ranked by market capitalization. Some of the more common industries in this sector include banking, mortgages, financial services, consumer finance, asset management, capital markets, financial exchanges, REITs, insurance, and more. Companies in the communications services sector are businesses that keep us connected through fixed-line networks or wireless access.