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Stock Market Sectors List

List of Stock Market Sectors

13 min read
Stock Market Sectors List

The Bullish Bears break down a list of the 11 stock market sectors. Sectors are the umbrella of industries and sub-industries containing the stock symbols and companies that traders and investors buy and sell. Sectors fall under the umbrella of indexes, which falls under the bigger umbrella of stock exchanges. Investors or traders cannot buy the major exchanges but can buy the indexes through ETFs and futures.

List of the 11 Sectors of the Stock Market

  1. Information Technology$XLK
  2. Healthcare$XLV
  3. Energy$XLE
  4. Real Estate$VNQ
  5. Financial$XLF
  6. Basic Materials$XLB
  7. Utilities$XLU
  8. Industrials$XLI
  9. Consumer Staples$XLP
  10. Consumer Discretionary$XLY
  11. Communications$XTL

Chart by TradingView

Hierarchy:

Just click any of the links to get an overview of each sector and see the stock symbols and companies included.

Stock Market Sectors List Basics

When the market is booming, sectors can be overlooked. However, knowing which sectors are safe is important when corrections come. A stock sector list can be broad. There are 11 different sectors in the stock market. Within each of those are sub-sectors.

Sectors allow stocks that have a lot in common to be grouped. As a result, you can compare them and see which stocks outperform others. How are the different stock sectors doing? How are the stocks in that sector fairing against each other? This information can be quite helpful to traders and investors looking to find a good play in a market that doesn’t have many.

Just as sports require a good defensive strategy, trading is the same. You usually only have a winning offense with a good defense. 

What would a stock sector list be without an actual list? 1999 a Global Industry Classification Standard was formed to keep the stock market organized. In fact, per Investopedia, more than 26,000 stocks worldwide have been classified by GICS, accounting for more than 95% of the world’s listed market capitalization.

As a result, that allows all traders or investors to classify stocks by regulated definitions. Each of these sectors plays an important role in trading and investing.

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Defensive and Cyclical Stock Market Sectors

We mentioned that there are 11 sectors in a stock market sectors list. However, you can break those 11 sectors into cyclical and defensive categories. Knowing what each category means can come in handy when the market is taking a downturn or an upturn. All sectors don’t run together. The market tug-of-war will influence each category and the different stock sectors.

The cyclical category is reactionary. In other words, these sectors react to market conditions. Hence, most of the stock sectors listed are in the cyclical category. The defensive category includes stocks that don’t experience loss in an economic downturn. As a result, they’re great stocks to add to any investment portfolio.

Defensive Sector

A. Defensive Category

What sectors make up the defensive category, and why are they important?

  1. Utilities$XLU
  2. Consumer Staples$XLP
  3. Healthcare$XLV

These stocks generate a consistent income no matter the economic climate. We all need water, gas, and electricity. You have to pay your utility bill, or you will be in trouble. As a result, the utility company always sees an influx of income. Consumer staples are food and beverage companies.

Overview

Just like with utilities, we all need food and drink. So even if the economy weakens, we’ll buy food and beverages. We still have to eat. And unfortunately, we all still get sick regardless of what the economy is doing, so this is why healthcare is in the defensive category. This is why the defensive category of the stock sectors list always generates an income. It’s why it’s an important category to invest in and keep an eye on in bearish times.  

The industrial and materials stock sectors list includes construction, manufacturing, mining, and refining. They’re reactionary to their environments and susceptible to change.

Energy and healthcare are the last 2 of the stock sectors listed in the cyclical category. The energy sector is made up of oil and gas. They rely on crude oil, natural gas, and other commodities.

The biotech sector could technically be defensive because people will always need healthcare. However, with the inclusion of biotech, there’s always room for growth.

As an easy rule of thumb, defensive companies usually pay higher dividends on their stock than cyclical companies.

Cyclical Sector

1. Utilities Sector

Utilities are in the defensive sector, characterized by low beta, volatility, and dividend yield. Because of this, they make for an excellent diversifier for other sectors in your portfolio. In case you didn’t know, the utility sector is one of the most stable regarding revenue, earnings, and dividends. This means that if you buy stocks in this sector, they are likely to perform well in any economic environment. With an average annual return of 11% over the past 30 years, it has outperformed other major market segments by a wide margin.

Utilities also tend to do well during periods of inflation because they generate revenue by selling electricity or water. Therefore, they have less exposure to price fluctuations than companies that produce goods like food or clothing. Which, as we know, can become more expensive when inflation rises.

2. Consumer Staples

Consumer staples might be your best bet if you’re looking for a stable investment with consistent returns. The consumer staples sector is a group of stocks that includes companies that produce and sell items consumers use every day, such as food and beverages, housewares, drugs, and tobacco. These stock investments offer lower volatility than many other areas of investing but still provide solid returns over time. Many investors include consumer staples stocks in a well-diversified portfolio or an overall asset allocation strategy. They also offer a consistent dividend yield and tend to be blue-chip stocks.

Consumer staples companies can include:

  • Food companies like Kraft Heinz (KHC), which makes packaged foods like cheese slices, macaroni & cheese dinners, Velveeta cheese and Jell-O pudding mix;
  • Beverage makers such as Coca-Cola Company (KO) or PepsiCo Inc (PEP);
  • Household goods manufacturers such as Procter & Gamble Company (PG), which produces Tide detergent or Gillette razors;
  • Tobacco companies such as Altria Group Inc (MO), which sells Marlboro cigarettes in the US through Philip Morris USA Inc.;

3. Healthcare Sector

The healthcare sector is one of the most important parts of your investment portfolio. The healthcare sector is a large part of the S&P 500 index, accounting for about 10% of its market capitalization.

We consider healthcare stocks defensive investments because they perform well during market volatility.

The healthcare sector is a wide-ranging category that includes companies focusing on research and development, manufacturing, and sales of pharmaceuticals and medical equipment.

The sector includes firms involved in drug discovery, testing, and production; laboratory instruments; hospital equipment; diagnostic imaging systems; surgical instruments; and dental implants. It also includes companies focused on developing new products or processes for the pharmaceutical industry (e.g., biotech).

Healthcare companies also have a low correlation with other sectors–meaning when one sector declines in value (such as energy), it doesn’t necessarily mean that all other markets will follow suit (like we saw with the S&P 500).

B. Cyclical Category

What sectors make up the defensive category, and why are they important?

  1. Energy$XLE
  2. Financial$XLF
  3. Information Technology$XLK
  4. Basic Materials$XLB
  5. Industrials$XLI
  6. Consumer Discretionary$XLY
  7. Communications$XTL
  8. Real Estate$VNQ

The cyclical category makes up the other sectors. These sectors react to what the market does. Which means they can get pretty volatile. For example, let’s take a look at the financial sector. Banks, investment funds, and insurance companies make up the financial sector. These react to their environment. Look what happens if an interest rate hike is threatened or happens. The sector goes wild.

Overview

The consumer discretionary and real estate sectors need a booming economy to be profitable. Why? They make money when people are spending money. People can’t buy homes if they have to tighten their belts. 

Clothing companies, media companies, and retailers make up the discretionary sector. You’re not going out shopping when you have to save money, so these companies need a booming economy.

The same can be said for the IT and communications sectors. The IT sector is made up of software developers and electronics companies. You will not buy the latest electronics if you can’t afford them. 

The same can be said with telecom companies. What’s one of the first things to go when you cut back? Cable. Internet companies will always be a strong sub-sector because the internet has become necessary. As a result, those companies will usually generate income.

1. Energy Sector

Energy is one of the economy’s biggest, most important sectors. Major oil and gas players include ExxonMobil, Chevron, and British Petroleum. Companies in the petroleum business include Marathon Oil Corp. and ConocoPhillips Co. These companies make money by extracting crude oil from the ground, processing it into gasoline and heating oil, then selling it to consumers at a profit.

Energy stocks tend to be more volatile than other sectors of the economy. Additionally, energy stocks pay higher than average dividends than other stock categories. However, they may also suffer downturns during recessions or low oil prices, reducing their profitability.

2. Financial Sector

You may already be familiar with the term “financial sector stocks.” These are shares in companies involved in the financial industry, such as banks and insurance companies. The financial sector is a major part of our economy and includes businesses like:

  • Banks (which lend money)
  • Insurance companies (which protect against loss)
  • Real estate investment trusts (REITs)

Some of the best-known stocks in the financials sector include Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) and financial giant JP Morgan Chase (JPM).

3. Information Technology

Information technology is a broad term that covers many different concepts and industries. The IT sector includes hardware, software, and telecommunications. IT sub-sectors include biotechnology, digital media, electronics, energy, alternative energy, health care, and medical equipment. Some of the best stocks in the information technology sector include Apple Inc., Amazon.com Inc., Microsoft Corporation, and Alphabet Inc.

4. Basic Materials

The basic materials sector is a broad category that has existed since the beginning. This sector includes mining, steel, oil and gas, and coal. The basic materials sector is an excellent place to invest because it is cyclical; when the economy is doing well, people tend to buy more cars and houses and other items that require raw materials like steel or copper. This causes demand for these goods, increasing their prices over time.

This sector is also volatile; it can swing wildly yearly depending on commodity prices (the price at which raw goods trade). However, they tend to be very profitable investments because the basics are essential to human life and economic growth.

Well-known materials stocks include paint maker Sherwin-Williams (SHW) and chemicals manufacturer DuPont (DD).

5. Industrials

Examples of industrial stocks include Caterpillar Inc. (CAT), General Electric Co. (GE), and Boeing Co. (BA). Industrial sector performance is closely tied to the overall health of the economy. Industrial stocks align with earnings growth expectations for the overall market and its investors.

Investors who buy industrials are betting on companies experiencing strong growth in earnings or sales momentum due to various factors. Take, for example, record-low unemployment rates and rising inflation levels that would drive demand for manufactured goods and typically have a high-profit margin per unit sold.

6. Consumer Discretionary

Consumer discretionary stocks are companies selling goods and services considered necessary to consumers’ daily lives. Consumer-oriented stocks typically sell luxury goods, leisure activities, and travel experiences.

Types of consumer discretionary stocks include restaurants (like McDonald’s), casinos (like Las Vegas Sands Corp.), hotels (like Marriott International), and cruise lines (such as Carnival Cruise Lines).

Although consumer-focused stocks are often considered luxury items, many also have a strong foothold in necessities like groceries, utilities, and clothing shops.

7. Communications

If you are looking to diversify your portfolio, communication stocks are a great way to do it. Communication stocks are less volatile than other sectors and generally more stable. They also have a long growth history, making them attractive to investors who want their investments to grow. In addition, communication companies tend to pay dividends regularly- and sometimes generously- making them even more attractive for investors who want income from their investments and capital gains (profits).

Social media giant Facebook (NASDAQ: META) and search engine behemoth Alphabet (GOOG) are among the biggest stocks in communication services.

8. Real Estate

The Real Estate sector is a large one, and it includes stocks that are involved in real estate, such as commercial and residential properties, as well as companies that provide construction services to build new homes, stores, and malls. You can invest in many real estate companies, from luxury hotels to office buildings. Each one has its niche market and specific focus.

Real Estate Investment Trusts (REITs) are an excellent way for investors to get exposure to real estate without having to deal with leasing tenants yourself. REITs trade on exchanges like stocks or bonds, so they’re easy to buy and sell in your brokerage account anytime during the day.

Frequently Asked Questions

  • Energy
  • Utilities
  • Consumer Staples

The Top 3 Investment Sectors: 

  1. Energy
  2. Consumer Discretionary
  3. Technology

 

An example of a stock sector is Consumer Staples. During a recession, most people still need to buy staples like personal hygiene products and toilet paper. 

It is not necessary to invest in every sector but investors need to have a diverse portfolio.

Different Types of Stocks to Invest In:

  1. Common stock
  2. Preferred stock
  3. Large-cap stocks
  4. Mid-cap stocks
  5. Small-cap stocks
  6. Domestic stock
  7. Dividend stocks
  8. Value stocks
  9. IPO stocks
  10. International stocks
  11. Growth stocks
  12. Non-dividend stocks

Amazon is in the Consumer Discretionary sector. They are found on the NASDAQ-GS. The industry  is Catalog/Specialty Distribution.

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