1. Home
  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 investments easy. Structural classification of an economy into different categories makes an in-depth analysis more efficient. Benchmarks are created, using various sectors. Comparison and analysis can then be done, between sectors and different funds, ETFs and money managers of all types.

    There are three major organizations that maintain sector classifications. In many ways they are very similar. Each one has a unique method to break down companies and their lines of business.

    The Global Industry Classification Standard (GICS) , is maintained by MSCI and Standard and Poors (S&P). There are 11 stock sector classifications, 24 industry groups, 69 industries and 158 sub-industries, in their schematic. Four of the sectors can be considered “defensive” and seven can be considered “cyclical”. The Global Industry classification is used by many stock tracking companies, funds and ETFs, to benchmark performance. It is a very widely used and accepted grouping. For that reason, StockMarketStrategies.net uses this classification to help users understand companies stock.

    The Industrial Classification Benchmark (ICB), is maintained by the FTSE group and Dow Jones. It is similar to the GICs classification. However, instead of 11 sectors, it has 10 industries, as the most general classification. From there, it divides the industries into 19 super-sectors and then divides those into 41 sectors. Lastly it divides the 41 sectors into 114 sub-sectors

    The Thomson Reuters Business Classification (TRBC), is maintained by Thomson Reuters. The TRBC has 10 economic sectors, 28 business sectors, 54 industry groups, 143 industries and 837 "Activities".

    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 Staples

    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 staples sector stocks.

    2. Utilities

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

    3. Heath Care

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

    4. Telecommunication Services

    This sector includes companies that provide fixed and wirless modes of communciation. As well as internet services. Learn more about telecommunication services sector stocks.

    Cyclical Stocks

    There are a total of seven stock sector in this category. They are characterized by how they move in accordance with the stock market and economy.

    1. Information 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.

    2. Materials

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

    3. Industrials

    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 industrails sector stocks.

    4. 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

    5. Financials

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

    6. Consumer Discretionary

    This sector is comprised of companies that produce consumer products that are purchased with income left over after essential items are purchased. Learn more about consumer discretionary sector stocks.

    7. Real Estate

    The real estate sector is primarily involved in housing and retail property construction and management. Learn more about real estate sector stocks.

    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