What are the Sectors of the stock market?

The stock market is most typically divided into eleven major sectors. These sectors are widely considered to represent all the key areas of the economy.

Sectors contain within them publicly traded companies that share common characteristics and focus.

These eleven sectors are as follows, Financials, Technology, Materials, Healthcare, Energy, Consumer Staples, Consumer Discretionary, Industrials, Utilities, Real Estate and telecommunications.

The financial sector is made of up financial institutions such as banks, Investment companies, Insurance companies among others. This sector is most directly affected by interest rate fluctuations.

The Technology sector contains tech companies, computer software and hardware companies, electronics and semiconductor stocks.

The Materials sector consists of companies that focus in the areas of developing raw materials, mining, forestry and refining.

The Healthcare sector is widely made up of biotechnology stocks, hospitals and medical device manufacturers. This sector is thought to be sustainable due to the fact that people will always need medical care.

Oil, coal and gas make up the bulk of the Energy sector as well as refineries and other integrated power firms. The value of stocks in this industry is very closely tied to the price of commodities such as oil and natural gas.

Consumer staples are companies that supply products that people in general are unwilling to do without. These companies create products related to food and beverages as well as other every day necessities.

Consumer Discretionary is often thought of as the opposite of consumer staples. These are companies that produce products that are widely dependent on the health of the economy. These companies are typically retailers, clothing companies, media companies and service providers.

The Industrial Sector consists of manufacturing companies, machinery producers and companies that are involved with construction and fabrication. Aerospace and defense stocks also fall into this broad sector.

Utilities are exactly what they sound like. These are companies with a focus on electric power, water and gas. This is thought to be one of the most consistent sectors based on the consistency of demand by consumers.

The Real Estate sector consists of companies that have holdings in commercial real estate, residential real estate, industrial and retail. This sector too is closely tied to interest rates and correlates closely with the financial sector.

Lastly, the telecom sector is made up of cell phone service providers, cable companies, internet providers, satellite service providers and more.

Most individual stocks will fall predominately in one of these eleven sectors. However, it is very common for companies to have business interests that are affected by multiple sectors simultaneously.

This is why it is important to know what sectors a given stock is involved in and how they are currently performing.

Additionally, and perhaps most importantly, the overall market indices can and will be affected by these sectors as they tend to move with the ebb and flow of the Dow, S&P or the Nasdaq.

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