Sector
A broad grouping of companies with similar business activities. The S&P 500 uses 11 GICS sectors such as Technology, Financials, and Energy.
A sector is a top-level classification of companies that share a similar primary business. The Global Industry Classification Standard (GICS), created by MSCI and S&P, defines 11 sectors used to categorize every company in major indices.
Sectors move together when macro forces affect an industry: rising oil prices lift Energy; falling rates boost Real Estate and Utilities; strong consumer spending powers Consumer Discretionary. Sector awareness helps traders identify where money is flowing and where it is leaving.
Within a sector, companies are further divided into industry groups, industries, and sub-industries. Most trading platforms let you filter by sector to find relative strength or weakness within a theme.
Related Terms
Asset Allocation
How you divide your portfolio across asset classes — stocks, bonds, cash, alternatives — to balance risk and return.
BeginnerBlue-Chip Stock
Shares of a large, well-established company with a long track record of stable earnings and often consistent dividends.
BeginnerDiversification
Spreading capital across uncorrelated assets to reduce risk. When one position falls, others cushion the blow.
BeginnerETF
A basket of securities that trades on an exchange like a single stock. ETFs give instant diversified exposure to an index, sector, or theme.
BeginnerRelative Strength (vs Index)
How a stock or sector is performing compared to a benchmark index like the S&P 500. Outperforming the index = positive relative strength.
IntermediateS&P 500
A market-cap-weighted index of 500 large US companies. The most widely used benchmark for US stock market performance.
BeginnerSector Rotation
The movement of institutional money between sectors of the economy as the business cycle evolves. One sector's outperformance often comes at another's expense.
AdvancedTicker Symbol
The unique letter code that identifies a publicly traded security on an exchange — AAPL for Apple, TSLA for Tesla.
Beginner