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What Are the Different Market Sectors?

Stock market sectors divide public companies into categories based on their line of business. As of January 2023, the Global Industry Classification Standard details 11 market sectors. 

Understanding stock market sectors

As of March 2023, the GICS lists 11 sectors, 25 industry groups, 74 industries and 163 sub-industries. All major public companies slot into these categories based on their activities and similarity to comparable businesses. 

Communication services sector

Major Businesses: Alphabet (Google), AT&T, Comcast and Meta

The communication services sector launched in 2018, reclassifying stocks from the consumer discretionary, technology and telecommunication sectors. Companies under this umbrella include landline and wireless phone, TV and radio networks, interactive media and internet-based communication services. 

Consumer discretionary sector

Major Businesses: Amazon, GM, Marriott, Tesla and Trex

The consumer discretionary sector contains companies that rely on consumer discretionary spending and demand. These companies come from industries like automotive, ecommerce, travel and leisure, household durables and apparel. 

Consumer staples sector

Major Businesses: Colgate-Palmolive, Costco, Procter & Gamble and Walmart

The consumer staples sector holds businesses that produce or sell essential products like food, toilet paper and toothpaste. These “recession-proof” companies stem from industries like food and beverage, alcohol and tobacco and household goods. Certain retailers and wholesale warehouses also make the cut. 

Energy sector

Major Businesses: Chevron, ExxonMobil, Halliburton and Suncor

Companies in the energy sector explore, extract, refine or sell resources like oil and natural gas. Businesses that service and support these industries or produce consumables like coal and ethanol also fit here. However, most renewables are classed under industrials or utilities. 

Financials sector

Major Businesses: Bank of America, Goldman Sachs, MetLife, PayPal and Visa

Businesses in the financial sector manage money, certain investments and insurance policies. Banks, brokerage and asset management firms, mortgage-related REITs and insurance agencies all operate in the financial sector.

Healthcare sector

Major Businesses: CVS, Johnson & Johnson, Pfizer, UnitedHealth and Walgreens

The healthcare sector contains companies that provide healthcare equipment and software, develop new drugs and technologies and perform cutting-edge research. Medical insurers and service providers like hospitals also qualify. 

Industrials sector

Major Businesses: 3M, Boeing, Caterpillar, General Electric and Union Pacific

Businesses in the industrial sector are often involved in industries like aerospace and defense, construction, engineering and transportation. Manufacturers of capital goods like aircraft, electrical equipment and heavy machinery fall into this category.

Materials sector

Major Businesses: DuPont, Ecolab, International Paper and Sherwin-Williams

The materials sector is comprised of companies that source, extract or process natural resources and raw materials. That includes companies that mine or refine metals, produce paper products or make chemicals, glass or construction materials. 

Information technology (IT) sector

Major Businesses: AMD, Apple, Cisco, Intel, Microsoft and Oracle

The information technology sector accounts for a range of tech-related companies relating to:

  • Semiconductor or hardware production
  • Software creation and management 
  • Certain internet services
  • Cloud computing services

While internet businesses increasingly dominate the IT sector, some remain classified elsewhere (think Amazon and Google). 

Real estate sector

Major Businesses: Digital Realty Trust, Public Storage, Redfin and Simon Property Group

The real estate sector was added in 2016 as residential and commercial property investment grew more popular. The space includes developers, property managers and most REITs. 

Utilities sector

Major Businesses: American Water Works, Dominion Energy, Exelon and NextEra Energy

The utilities sector includes companies that provide electricity or natural gas or own and manage water resources. Select renewable energy firms also fit here. As defensive investments, utilities are unusual in that they’re often location-specific, highly-regulated monopolies with a low-risk, low-volatility profile. 

How do stock market sectors affect you?

Stocks within a given market sector may respond similarly to economic pressures and confer unique benefits and risks to your portfolio. 

You can use this knowledge to diversify and capture upsides across industries and market conditions throughout your investing career. 

Disclosures

Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.

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