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  2. Stock Market Sectors

    Stock sectors group all the stocks in the stock market according to their line of business into generally accepted names. The underlying purpose of putting stocks into sectors is to make diversification of investment easy. Structural classification of an economy into different categories makes an in-depth analysis more efficient.

    According to the Global Industry Classification Standard (GICS), there are eleven stock sector classifications. Two can be considered “defensive” and nine can be considered “cyclical.” The NASDAQ uses a similar methodology to group stocks into sectors, which is based on the ICB classifications. We use the NASDAQ's methodology to classify sectors, industries and stocks. The NASDAQ sectors are listed below.

    Understanding stock sectors is one of the stock basics that help in the formulation of effective investment strategies. It is crucial to know the differences between each stock sector.

    Defensive Stocks

    Defensive stocks tend not to go down in price as much as the rest of the stock market in a bad economy, since people are always in need of the services and goods they offer. However, stocks in this sector do not necessarily rise with a rising market.

    1. Consumer Non-Durables

    Comprises companies that specialize in the production of consumer products designed to be used Immediately, food products, beverages, drug retailing, tobacco, and personal products. Learn more about consumer non-durable sector stocks

    2. Public Utilities

    Consists of companies such as gas utilities, electric utilities, independent power producers, multi-utilities, and energy traders. Learn more about public utilities sector stocks

    3. Heath Care

    Belonging to this sector are companies such as pharmaceuticals and biotechnology, healthcare equipment and services. Learn more about the health care sector

    Cyclical Stocks

    There are a total of eight stock sector in this category, plus miscellaneous and other sectors. They are characterized by how they move in accordance with the stock market and economy.

    1. Consumer Services

    Companies in this category include such as diversified consumer services, media, restaurants, leisure, and hotels, etc. Learn more about consumer services sector stocks

    2. Technology

    Companies belonging to this sector include office electronics, wireless telecommunication services, information technology services, computers and peripherals, internet software and services, communications equipment, etc. Learn more about information technology sector stocks

    3. Basic Industries

    Companies belonging to this sector are metals and mining, containers and packaging, construction materials, chemicals, paper and forest products. Learn more about the basic industries sector

    4. Capital Goods

    Companies in this group include construction and engineering, autos, auto components, aerospace, and defense, electrical equipment, conglomerates, marine, airlines and building products. Learn More about the capital goods sector

    5. Energy

    Companies in this group include that develop and produce drilling and energy-related services, crude oil and natural gas. Learn more about the energy sector

    6. Financials

    Companies in this category include thrifts and mortgage finance, consumer finance, capital markets, commercial banks, insurance, and diversified financial services. Learn more about the financial sector

    7. Consumer Durables

    These are goods that are not immediatly consumed or have a lifespan of three years or more. Examples include cars, washing machines and clothes. Learn more about consumer durables

    8. Transporation

    These are companies that move stuff. They include air freight and logistics, trucking, road and rail. Learn more about the transportation sector

    9. Miscellaneous

    Pretty much anything that does not fit into the other sectors goes here. More miscellaneous sector information

    Other Sectors

    These are sectors not included in the NASDAQ or GIC classification

    ETFs, ETNs and Funds

    These are investment products that hold assets. Usually, they attempt to mimic an index or a certain sector or industry. Learn more about ETF's, ETNs and Funds