The main sectors of the stock market
The stock market is huge in numbers, since investors are truly spoiled for choice when considering which company stock to invest in. A good way to navigate themselves and avoid confusion is to be aware of the different stock market sectors that exist. Each stock market sector consists of a distinct group of different stocks, which have a lot in common, since they usually pertain to companies in the same industry or very similar industries. The most commonly used classification system is the Global Industry Classification Standard (GICS) and we shall by using this system in order to overview the main stock marker sectors. Such a categorisation of stocks is very useful and helpful for stock investors, since it allows them to concentrate on stocks from the sectors that interest them, while easily make more effective comparisons between sectors and amongst companies in the same sector, revealing which stocks make the most money. According to the GICS, the stock market is mainly divided into the following sectors:
Top Stock Sectors for Investment in 2024
All You Need to Know for Energy Sector!
As revealed by its name, the energy sector includes those companies whose main activity is in the oil and natural gas industries. Oil and gas exploration and production companies feature high in this sector, as are the companies producing coal, ethanol, and other types of consumable fuels. It should be noted though that renewable energy company is not classed under the energy sector, but under the utility sector instead. The energy sector also includes businesses closely related to energy production, such as businesses that provide equipment, materials, and services to oil and gas producers.
Things we liked:
Straightforward evaluation and assessing the value swings of energy stocksBig gains are possible both for short-term traders, as well as buy and hold investors.
Things we didn't like:
Increased risk for sudden losses due to high volatility.Energy stocks are vulnerable at times of economic or supply chain crises.
Becoming stocks of diminishing returns is a possibility
All You Need to Know for Materials Sector!
The materials sector is a wide encompassing sector since the companies classed under it are those providing a vast array of goods for use in manufacturing and related fields. Mining companies, companies making paper and other forest products, companies manufacturing chemicals and construction materials, as well as companies making containers and other packaging materials, are also classed under the materials sector.
Things we liked:
There Will Always Be Demand for Basic MaterialsSome Basic-Materials Stocks Are Cyclical
Some Basic-Materials Stocks Act As Safe Havens
Things we didn't like:
Cyclical Isn’t Always GoodIt’s A Boring Sector
Big Companies May Not Generate Profits
All You Need to Know for Industrials Sector!
The industrials sector houses many conglomerates and it is a sector that includes numerous companies with different economic activities, all of which entail the usage of heavy equipment. Under the industrials sector, investors can find the stocks of companies in the transportation field, such as airlines, railroads and logistics companies, while companies in the fields of aerospace, construction, engineering and defence, are also classed under the industrials sector. Moreover, this sector includes companies that manufacture electrical equipment and machinery, as well as building products.
Things we liked:
Easy to Read.Poised for Growth.
A Long History.
Things we didn't like:
Economic Dependence.Low Dividends.
Political Risk.
All You Need to Know for Utilities Sector!
The utility sector covers an array of companies that specialize in the provision of utilities to consumers, such as those companies which provide both residential and industrial consumers with electricity, natural gas, and water. Some utility companies are active in the provision of more than one utility, while the utilities sector also houses the producers and distributors of renewable energy sources.
Things we liked:
Strong Dividend PaymentsOnly One Way to Go: Up!
Utilities Stocks Provide Economic Shields
Things we didn't like:
Relatively Slow GrowthLosses Do Occur
Political Risk.
All You Need to Know for Healthcare Sector!
The healthcare sector is divided into two main subcategories. The first includes the pharmaceutical and biotechnology companies, as well as companies producing the supplies and tools necessary to test the effectiveness and safety of treatments in labs and clinical trials. The second subcategory of the healthcare stocks sector houses companies that provide health insurance services and those companies that provide medical diagnostics tools, healthcare equipment, surgical supplies, and services related to such equipment and tools.
Things we liked:
There’s a Wide Range of OpportunitiesHealth Care Stocks Are Interesting
There’s a Feel-Good Effect
Things we didn't like:
Exclusivity Doesn’t Last ForeverClinical Trials Can Go Wrong
There Are Several Risky Plays That Look Good
All You Need to Know for Financials Sector!
Businesses whose primary activity is the handling of money are classed under the financial sector. Obviously, this sector includes banks and financial institutions, as well as insurance companies, brokerages and trusts which deal with real-estate investments and mortgage related issues. The financial sector also includes providers of finance products to consumers as well as financial brokerage houses.
Things we liked:
Excellent long-term investment opportunitiesThings we didn't like:
Recession-proneSensitive to interest rate fluctuations
All You Need to Know for Consumer Services Sector!
The consumer discretionary sector pertains to the providers of goods and services, the demand for which depends on the financial status of consumers, i.e. luxury goods and services, such as higher-priced cars, or even luxury hotels and restaurants. Since the luxury market is wide and varied, the consumer discretionary sector includes both brick-and-mortar retailers, as well as e-commerce vendors of such luxury goods and services.
Things we liked:
Stable Growth and DividendsDiversified Investment Options
The Feel-Good Factor
Things we didn't like:
Services EvolveThe Sector Is So Big It’s Hard to Navigate
Educating Yourself on the Entire Sector Is Difficult
All You Need to Know for Information Technology Sector!
The rapidly growing information technology sector includes all companies from different fields, whose main activity is that of technological innovation. Besides the software developing companies and companies providing services related to the implementation of technological solutions, the information technology sector also includes companies that provide and build the hardware necessary for technological solutions and innovations, such as equipment, components, and semiconductors.
Things we liked:
Invest in What You Enjoy.Tremendous Growth Potential.
Options for Diversification.
Things we didn't like:
High Valuations.High Volatility.
Tech Isn’t Known for Dividends.
All You Need to Know for Communication Services Sector!
The communication services sector is a new addition to the GICS classification system, created to house companies active in areas that were previously classed under other sectors, mainly due to the rapid growth and development of the sector itself. The sector of communication services is further divided into two main subclasses. The first includes the providers of telecommunication services, both landline, and wireless, while the second subcategory pertains to companies active in the media and entertainment fields, ranging from traditional media such as television and radio, to newer forms of interactive media available online.
Things we liked:
The global economy relies on telecom servicesTremendous Growth Potential.
In high demand, regardless of global, political, or socioeconomic change
Things we didn't like:
Ferocious competition among startupsHigh Volatility.
During a bear market, losses can be sizable
All You Need to Know for Real Estate Sector!
The real estate sector houses all companies related to real estate investments, such as companies that develop real estate projects and those that manage the project and obtain tenants for such properties. Moreover, businesses such as most real estate investment trusts and funds, which enjoy a special tax status, are also classed under the real estate sector.
Things we liked:
DiversificationStrong Income Yields
High Liquidity
Things we didn't like:
Weak GrowthPotential for High Risk and Fees
Yield Taxed as Regular Income
All You Need to Know for Services Sector!
Service stocks are the stocks of companies falling under the service sector. This is comfortably the biggest sector of economic activity, both in terms of income generation but also in terms of the numbers of companies involved in the provision of services, which encompass a widely varied spectrum.
Things we liked:
Attractive and hipStable Growth and Dividends
Offering the Feel-Good Factor
Things we didn't like:
Services are evolving fastThe sheer size makes navigation difficult
Education on the Entire Sector Is Difficult
Stock Market Sectors FAQ - Best Sectors to invest in now
What are stock market sectors?
Which stock market sectors do well during a recession?
- Energy
- Materials
- Industrials
- Utilities
- Healthcare
- Financials
- Consumer Services
- Information Technology
- Communication Services
- Real Estate
- Services