What Are Stock Market Sectors?
Sectors are big groups that split the stock market by type of business. The standard system has 11 sectors, from technology to utilities.
The 11 sectors
- Information technology
- Health care
- Financials
- Consumer discretionary: things people want, like cars and travel
- Consumer staples: things people need, like food and soap
- Communication services
- Industrials
- Energy
- Materials
- Utilities
- Real estate
Why sectors matter
Companies in the same sector often move together, because the same news affects them. If you own five tech companies, you are less spread out than it seems. Mixing sectors is a key part of diversification.
Defensive vs cyclical sectors
Defensive sectors, like consumer staples, health care and utilities, sell things people buy even in a recession. Cyclical sectors, like consumer discretionary and industrials, rise and fall more with the economy.
See it in real companies
Open a company to see what it sells and how it makes money.
Related terms
DiversificationNot putting all your money in one place.
S&P 500500 large US companies in one index.
RecessionWhen the economy shrinks for a while.
Asset allocationHow you split money between stocks, bonds and cash.
VolatilityHow much and how fast a price moves.
Index fundA fund that copies a market index.