Stock Market Sectors: 11 Official GICS Groups The Motley Fool

Since these companies are at the beginning of the supply chain, they are vulnerable to changes in the business cycle. The healthcare 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 always require medical aid. Also, you can compare how consumer discretionary ETFs as a subgroup compare with other subgroups of sector ETFs – for example, financials.

11 sectors of the stock market

When people struggle financially, they’re less likely to go out and buy a new home. But when the economy is growing, the real estate sector tends to do well. Stocks in the real estate sector can be a great long-term investment.

Technology

As industries grow and shift, the way we classify companies changes too. This chart compares the performance of the overall S&P 500 Index to the performance top indicators for a scalping trading strategy of the 11 sectors over one-, five-, and 10-year time frames. Not all stocks fit perfectly like jigsaw pieces into a specific sector, which can be confusing.

By understanding them, you can better know where you want to invest your money. The heatmap ranks the percentage of stocks in each sector that are above their 20, 50, 100, 150 and 200-Day Moving Averages. 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. If you want to learn different strategies to employ on all market conditions then take ourtrading courses.

  • Alternatively, traders and investors can select specialised ETFs such as the iShares Developed Markets Property Yield UCITS ETF or the Real Estate Select Sector SPDR Fund.
  • For example, you could pick a sector and buy individual stocks that represent one or all of the industries it covers.
  • When the economy climbs, there will be more demand for financial services.
  • Real estate companies and REITs were moved from the financials sector to their own separate sector in 2016.

Keeping diversification in mind is important when choosing mutual funds since you don’t want to make the mistake of ending up over-weighted with multiple funds from the same sector. Based on the numbers, it’s immediately clear that information technology is the largest market sector based on market capitalization. This sector covers six industries, including software, technology, hardware, semiconductors and IT services. Its market capitalization is more than double that of the industrials sector, which has more than twice as many underlying industries. The information technology – IT – sector consists of companies that develop or distribute technological items or services, and includes internet companies.

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Examples of the information technology sector stocks include Adobe , Apple , Microsoft and Oracle . Companies in the industrials sector are businesses that provide commercial and industrial products, including manufacturers and distributors of capital goods. Examples of the industrials sector stocks include Boeing , CSX Corp , FedEx , Lockheed Martin and Union Pacific . Companies in the health care sector are businesses that are focused upon improving and healing human life. Examples of the health care sector stocks include Biogen , Johnson & Johnson , Merck & Co. , Pfizer and UnitedHealth Group . There are 11 major market sectors, as defined by the Global Industry Classification Standard , that most investment managers and investors will monitor and use for investment purposes.

  • And it may continue to outperform if the bull market keeps running.
  • An industry is a classification that refers to a group of companies that are related in terms of their primary business activities.
  • A sector is a slice of the stock market that represents a certain part of the economy or industry.

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. Withexchange-traded funds, you can buy a diversified basket of an entire grouping. ETFs are similar to mutual funds but trade like stocks, and allow you to get exposure to a wide range of investments in a sector or industry without needing to research individual stocks. But the financials sector also includes insurance companies, investment brokerages and even some real estate firms. Companies in the information technology sector are businesses that research, develop and distribute technology-based goods and services.

Uses of Breaking Down into Sectors

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A sector is further broken down into sub-categories or specific industries, which allows for a more defined and closer grouping of similar businesses. Includes health care providers and services, companies that manufacture and distribute health care equipment and supplies, and health care technology companies. In 1999, index giants S&P Dow Jones Indices and MSCI created what’s called the Global Industry Classification System , which separated companies technical analysis strategies for beginners and industries into sectors. For instance, during the 2010s, GICS discarded the telecommunications sector and created the real estate and communication services sectors. The telecommunication services sector features cable companies, internet service providers, wireless providers, satellite companies, and many more. Consumers are generally providing recurring revenue for these companies, but some subsets of the industry face rapid change.

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Technology products include computers, microprocessors, and operating systems. Example of companies in this sector includes big names like Microsoft Corporation, Oracle Corp., and Mastercard Inc. This sector has seen a lot of change in recent years because of the rapid rise in technology-based companies. The industrials sector encompasses a wide range of different businesses that generally involve the use of heavy equipment. Transportation stocks such as airlines, railroads, and logistics companies are found within the industrials sector, as are companies in the aerospace, defense, construction, and engineering industries.

11 sectors of the stock market

A Select Sector SPDR also may be adversely affected by the performance of the specific sector or group of industries upon which it is based. You can expect that shares in a Select Sector SPDR will move up or down in value with the value of its related Select Sector Index. In addition, the overall depth and liquidity of the secondary market in these shares may fluctuate. Sector SPDRs are subject to risk similar to those of stocks including those regarding short selling and margin account maintenance. All ETFs are subject to risk, including possible loss of principal.

Stock Sectors List

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List of Market Sectors

It’s conveniently divided into sectors that group different companies by the types of business they conduct. The information technology sector includes companies that produce software fullstack software engineer and other IT products and services. It also contains companies that manufacture hardware such as communications equipment, mobile phones, computers and semiconductor equipment.