What Are the 11 Stock Market Sectors?

The U.S. stock market is one of the world’s largest and most liquid financial markets, attracting investors globally. Before diving into U.S. stocks, understanding how companies are categorized into different sectors can help investors analyze individual companies (how they perform relative to their peers) and also discern broader sector trends to guide portfolio allocation.

In this article, you’ll learn:

• Stocks and ETFs in each sector
• The 11 sectors in the U.S. stock market
• The industries each sector contains

What is GICS?

GICS stands for Global Industry Classification Standard. It was jointly developed in 1999 by MSCI and Standard & Poor’s. Under GICS, companies are classified by their primary business operations into:

• Sectors
• Industry groups
• Industries
• Sub-industries

This hierarchical system helps investors and analysts systematically categorize companies, compare performance within the same group, and make sector-based investment decisions. GICS is widely used—over 26,000 public companies use it, representing more than 95% of global market capitalization. 

In U.S. markets, there are 11 sectors under GICS:

• Information Technology
• Financials (or Financial Services)
• Healthcare
• Consumer Discretionary
• Industries
• Communication Services
• Consumer Staples
• Energy
• Real Estate
• Materials
• Utilities

1. Information Technology (IT)

The GICS code for the Information Technology sector is 45.

It includes companies in software, hardware, and semiconductors.

More specific subcategories within the industry include companies that specialize in software design, software technology solutions, computer hardware, hardware technical support, and the manufacturing and sale of equipment and components used during installation and subsequent operations. The industry also encompasses the semiconductor sector, which includes semiconductor manufacturers as well as companies that produce equipment used in chip fabrication.

As of May 2022, its sector fundamentals:

Included Industries

Characteristics of the IT Sector

The IT sector currently accounts for 27.23% of the total market capitalization, with 471 listed companies in this category ^[source].

Advantages

• The expansion of fifth-generation (5G) cellular networks and the trend toward localization are expected to strengthen the sector’s fundamentals.
• Companies in this sector generally have strong balance sheets and solid earnings growth potential.
• Financing costs are relatively low across the industry.
• As demand for financial technology and online retail services continues to grow, the need for related infrastructure and software is expected to increase as well.
• Firms that invest in technology to enhance productivity have a higher likelihood of achieving long-term growth.

Disadvantages

• Historically, the sector has often been valued too highly, leading to potential overvaluation risks.
• Global semiconductor inventories remain limited, creating a supply shortage.
• Capital concentration within the sector is high, with a large portion of funds flowing into only a few major stocks.
• Antitrust lawsuits between the U.S. and Europe could have a significant impact on leading companies.

Stocks and ETFs included

• Apple Inc. (AAPL)
• Microsoft Corp. (MSFT)
• Amazon.com Inc. (AMZN)
• Vanguard Information Technology ETF (VGT)
• Fidelity MSCI Information Technology ETF (FTEC)
• SPDR Morgan Stanley Technology ETF (MTK)
• SPDR S&P Semiconductor ETF (XSD)

2. Financials

The GICS code for the financial services sector is: 40

The Financials sector primarily consists of companies engaged in money management and financial transactions.

The largest segment is the banking industry, but the sector also includes other financial entities such as insurance companies, brokerage firms, financial product providers, and real estate investment trusts (REITs) related to mortgage lending.

In general, changes in global interest rates and Federal Reserve policy decisions tend to have a significant impact on the performance of this sector.

As of May 6, 2022, the key fundamentals of the sector are as follows:

Included Sub-Sectors

Overview of the Financials Sector

The Financials sector currently accounts for 10.96% of total market capitalization, with 1,518 listed companies in this category ^[source].

Advantage

• Rising short-term or long-term interest rates generally benefit the sector’s performance.
• Compared with historical valuation levels and other sectors, the sector’s valuation remains attractive.

Disadvantage

• High cash reserves and low loan volumes are currently limiting growth momentum.
• When economic growth approaches its peak, it tends to weigh on overall market performance.
• Stricter banking regulations may further constrain the sector’s upside potential.
• Fintech companies are gradually capturing part of the traditional banks’ market share.

Stocks and ETFs

• Visa Inc. (V)
• JPMorgan Chase & Co. (JPM)
• Bank of America Corp. (BAC)
• Financial Select Sector SPDR Fund (XLF)

3. Healthcare

The GICS code for the Healthcare sector is: 35

The Healthcare sector is primarily composed of two main segments:

• Healthcare equipment and services: companies offering medical devices, surgical supplies, diagnostic tools, and health insurance products.
• Biotechnology and pharmaceuticals: companies involved in developing biotech-based drugs and therapies, as well as those providing analytical tools and supplies required for clinical trials.

As of May 6, 2022, the sector’s key fundamentals are as follows:

Industries included in Healthcare

Overview of the Healthcare Sector

The Healthcare sector currently accounts for 14.20% of total market capitalization, with 408 listed companies in this category ^[source].

Advantages

• Most companies in this sector have strong balance sheets and ample cash reserves, allowing for dividends and mergers & acquisitions.
• Global population aging and the expansion of emerging markets are expected to drive long-term growth.
• Demand for elective surgeries, pharmaceutical products, and medical equipment continues to recover.
• Current valuations appear attractive compared with the sector’s historical averages.

Disadvantages

• The declining number of healthcare professionals and rising labor costs are constraining growth.
• New entrants, such as Amazon Care and other retail healthcare providers, are increasing competition and may pressure traditional revenue streams.

Representative Stocks and ETFs

• UnitedHealth Group Incorporated (UNH)
• Johnson & Johnson (JNJ)
• Eli Lilly and Company (LLY)
• Pfizer Inc. (PFE)
• AbbVie Inc. (ABBV)
• Health Care Select Sector SPDR ETF (XLV)
• Invesco S&P 500 Equal Weight Health Care ETF (RYH)
• iShares Global Healthcare ETF (IXJ)

4. Consumer Discretionary

The GICS code for the Non-Essential Consumer Goods sector is 25.

The Consumer Discretionary sector includes goods and services that are non-essential, meaning that demand for these products often depends on consumers’ income levels and financial confidence.

In other words, people tend to spend more on discretionary items when the economy is strong and cut back when it weakens. Therefore, this sector is sensitive to changes in the overall economic environment, interest rates, and consumer sentiment.

The sector covers a wide range of businesses — from automobile manufacturers and luxury goods retailers to leisure product sellers and e-commerce companies. It also includes service-oriented businesses, such as hotels and restaurants.

As of May 6, 2022, the sector’s key fundamentals are as follows:

Sub-Sectors Included

Characteristics of the Consumer Discretionary Sector

The sector currently accounts for 11.45% of total market capitalization, with 290 listed companies in this category ^[source].

Advantages

• As more employees return to the workplace, the sector is expected to experience renewed growth.
• The expansion of online retail models continues to boost retail performance overall.
• Rising housing prices tend to support growth in home improvement retailers and related businesses.

Disadvantages

• The sector’s performance is heavily concentrated in the internet retail and automotive industries.
• Semiconductor shortages have placed significant pressure on automotive and consumer electronics production.
• High interest rates reduce consumers’ purchasing power, dampening overall spending.

Representative Stocks and ETFs

• eBay Inc. (EBAY)
• Ford Motor Co. (F)
• Amazon.com, Inc. (AMZN)
• McDonald’s Corporation (MCD)
• Tesla, Inc. (TSLA)
• iShares U.S. Consumer Discretionary ETF (IYC)
• Invesco S&P Small Cap Consumer Discretionary ETF (PSCD)
• ProShares Online Retail ETF (ONLN)

5. Industries

The Industrial segment covers a wide range of company types involved in heavy equipment, divided into three main categories: capital goods, business and professional services, and transportation, which include companies that provide equipment for aviation, railroads, logistics and transportation, defense, and construction and engineering, as well as companies that provide related services.

The GICS code for the industrial sector is: 20.

Fundamental information about the sector as of May 6, 2022 for this sector:

Industries included in the industry

Industrial sector characteristics

The sector currently has a weighting of 7.96% in the overall market. There are currently 467 stocks in the sector ^[source].

Plate Advantage

• The sector is a direct beneficiary of the increasing demand for capital in a growing global economic environment;
• Many of the companies in the sector have been more fundamentally sound amid rising earnings expectations;
• With geopolitical risks on the rise, increased defense spending will pull the sector forward;
• The boom in global trade and online shopping has strongly stimulated the growth of the transportation industry.

Board Disadvantage

• Rising fuel prices can adversely affect the transportation and aviation sectors.

Stocks and ETFs Common to the Sector

• United Parcel Service, Inc. (UPS)
• Union Pacific Corporation (UNP)
• Raytheon Technologies Corporation (RTX)
• Honeywell International Inc. (HON)
• Caterpillar Inc. (CAT)
• iShares U.S. Aerospace & Defense ETF (ITA)
• Invesco Aerospace & Defense ETF (PPA)

6. Communication Services

The Communication Services sector is the newest sector in the current GICS sector setup, which includes several industries that were once part of other sectors.

The segment contains telecom service providers, media companies and entertainment companies, among others, involving traditional fixed-line telephone service providers, wireless telecom network service providers, traditional television and radio companies and emerging streaming media companies.

The GICS code for the Communication Services segment is: 50.

Fundamental information about the sector as of May 2022 for this sector:

Industries included in communication services

Characteristics of the communications services industry

The sector currently has a weighting of 8.64% in the overall market. There are currently 162 stocks in the sector ^[source].

Plate Advantage

• Social media currently has a clear competitive advantage over other industries;
• The rollout of 5G networks will further boost the sector;
• Government investment in infrastructure will reduce the cost of using 5G networks.

Board Disadvantage

• The ability of some brands, such as Apple, to block ads could affect the revenue that social media companies make in the advertising business;
• Increasing antitrust regulation could affect the revenues of search engines as well as social media companies;
• Streaming services run the risk of tending to saturate the market, which could limit price increases as new competing companies enter the picture;
• Sector trends are largely influenced by the two giant companies, Facebook and Google, whose movements have a very significant impact on the overall trend of the sector;

Stocks and ETFs Common to the Sector

• Alphabet Inc. (GOOGL)
• Meta Platforms, Inc. (FB)
• Verizon Communications Inc. (VZ)
• The Walt Disney Company (DIS)
• AT&T Inc. (T)
• Netflix, Inc. (NFLX)
• Communication Services Select Sector SPDR Fund (XLC)
• Invesco S&P 500 Equal Weight Communication Services ETF (EWCO)
• iShares Global Comm Services ETF (IXP)

7. Consumer Staples

The Essential Consumer Goods segment consists primarily of goods and services that consumers are bound to need regardless of their financial situation, such as food, tobacco, beverages, and home and personal care products, and involves the manufacturers and distributors of these products, such as tobacco manufacturing companies, as well as sales companies such as supermarkets.

The GICS code for the Essential Consumer Sector is: 30.

Fundamental information about the sector as of May 6, 2022 for this sector:

Sectors included in Essential Consumption

Essential Consumption Industry Characteristics

The sector currently has a weighting of 6.82% in the overall market. There are currently 154 stocks in the sector [source].

Plate Advantage

• Companies in this segment usually have stable profitability;
• Companies in this segment are committed to minimizing their costs for better earning power;
• The recovery of the restaurant industry has stimulated demand for wholesale food products, which in turn has led to an upturn in the overall sector;
• Some companies can pass on high costs well as a way to stabilize yields.

Board Disadvantage

• While some costs can be passed on, companies in this segment all generally face higher input costs;
• A rise in interest rates above the expected rate of economic growth could result in a setback to the sector’s upward trend.

Stocks and ETFs Common to the Sector

• Walmart Inc.(WMT)
• The Procter & Gamble Company (PG)
• The Coca-Cola Company (KO)
• PepsiCo, Inc.
• Costco Wholesale Corporation (COST)
• Philip Morris International Inc. (PM)
• Consumer Staples Select Sector SPDR Fund (XLP)
• Vanguard Consumer Staples ETF (VDC)
• iShares U.S. Consumer Staples ETF (IYK)

8. Energy

The Energy segment focuses on the oil and natural gas industries, including companies that explore and produce oil, and companies that explore, reserve and market natural gas, etc. It also involves producers of other consumable energy sources, such as coal and ethanol, as well as companies that provide equipment, materials, and related services in the exploration, reserving and production processes.

The GICS code for the energy sector is: 10.

Fundamental information about the sector as of May 6, 2022 for this sector:

Sectors included in energy

Characteristics of the energy sector

The sector currently has a weighting of 4.17% in the overall market. There are currently 217 stocks in the sector [source].

Plate Advantage

• The sector is trending upward in the current environment of curtailed energy supplies caused by the Russia-Ukraine war;
• Large, diversified energy companies have strong balance sheets and excellent expense and investment management self-regulation;
• The sector’s valuations are more attractive relative to other sectors.

Board Disadvantage

• The price of oil has risen to a level that is putting pressure on the economy and the demand for oil;
• As the global economic expansion slows down, the sector could face a consequent slowdown in its rise;
• Increased regulation may limit the sector’s upward movement;
• When the Russia-Ukraine war situation eases and Iranian sanctions are eased, leading to a recovery in oil supplies, it could make the sector move lower;
• As clean energy is promoted, it will reduce the demand for oil.

Stocks and ETFs Common to the Sector

• Exxon Mobil Corporation (XOM)
• Chevron Corporation (CVX)
• Shell plc (SHEL)
• TotalEnergies SE (TTE)
• British Petroleum BP p.l.c. (BP)
• Energy Select Sector SPDR Fund (XLE)
• Vanguard Energy ETF (VDE)
• Alerian MLP ETF (AMLP)

9. Real Estate

The real estate segment mainly includes real estate developers and managers, including real estate developers, real estate operating companies, etc. Meanwhile, trusts for various physical real estate investments are also counted in this segment, such as common industrial, hotel, residential, office and healthcare real estate investment trusts.

The GICS code for the real estate sector is: 60.

Fundamental information about the sector as of May 2022 for this sector:

Industries included in real estate

Characteristics of the real estate industry

The sector currently has a weighting of 2.92% in the overall market. There are currently 368 stocks in the sector ^[source].

Plate Advantage

With the Federal Reserve’s interest rate cuts, it favors investor financing, allowing REITs to deliver decently attractive and high dividends;

With the rapid growth of technology services and e-commerce, there is a clear upward trend in industries such as warehouses, data centers, and telecommunication towers;

Single-family residential REITs are going strong as rental prices rise;

The results of long-term demographics will lead to a resurgence in nursing and assisted living facility construction to spur overall trends in the industry;

Board Disadvantage

If the Fed begins to raise interest rates, the industry will be directly affected;

The growth of e-commerce has caused brick-and-mortar stores to begin to shrink, which has impacted the retail REIT;

Home-based offices have led to a shrinking demand for offices, thus reducing the need for office real estate;

Stocks and ETFs Common to the Sector

• American Tower Corporation (AMT)
• Prologis, Inc. (PLD)
• Crown Castle International Corp. (CCI)
• Simon Property Group, Inc. (SPG)
• Digital Realty Trust, Inc. (DLR)
• Nuveen Short-Term REIT ETF (NURE)
• iShares Residential and Multisector Real Estate ETF (REZ)

10. Materials

The Materials segment primarily consists of companies that provide multiple categories of commodities used in manufacturing and other applications, including mining companies, forest products companies, paper companies, chemical producers, construction material producers, packaging manufacturers, and container manufacturers, with the overall segment having some cyclical value characteristics.

The GICS code for the materials board is: 15.

Fundamental information about the sector as of May 2022 for this sector:

Industries in which the material is included

Materials Industry Sector Characteristics

The sector currently has a weighting of 2.77% in the overall market. There are currently 160 stocks in the sector ^[source].

Plate Advantage

• The overall valuation of the sector is decently attractive;
• Earnings growth is expected to accelerate as metal and agricultural prices move strongly;
• Policy support for clean energy and related infrastructure will stimulate higher demand for industrial materials and related services;
• Currently with the sanctions against Russia, this has led to higher commodity and chemical/fertilizer prices.

Board Disadvantage

• Cyclical price sectors can cause the sector’s upward movement to be limited when the economy grows too fast causing the Federal Reserve to use interest rate hikes to regulate;
• High energy prices have raised the cost of chemical production, leading to a decline in profits;
• Severe supply chain bottlenecks can limit the overall rise of cover that;
• Strict environmental regulations can have a negative impact on the industry.

Stocks and ETFs Common to the Sector

• DuPont de Nemours, Inc. (DD)
• BHP Group Limited (BHP)
• The Sherwin-Williams Company (SHW)
• Freeport-McMoRan Inc. (FCX)
• Air Products and Chemicals, Inc. (APD)
• iShares Global Materials ETF (MXI)
• Materials Select Sector SPDR Fund (XLB)

11. Utilities

The Utilities segment encompasses different types of utility companies, such as electric, water, and natural gas utilities, water utilities, and natural gas utilities that provide electricity to residential and commercial customers, as well as independent power companies and renewable power producers. Utilities are typically regional in nature, with Duco Energy serving the southeastern United States and Consolidated Edison serving the northeastern United States.

The GICS code for the Utilities segment is 55.

Fundamental information about the sector as of May 6, 2022 for this sector:

Industries included in public utilities

Characteristics of the utility industry

The sector currently has a weighting of 2.87% in the overall market. There are currently 124 stocks in the sector ^[source].

Plate Advantage

• There is a relatively stable trend of industry progress in the vast majority of economic environments;
• As a capital-intensive segment, only lower financing costs are required.

Board Disadvantage

• As riskiness decreases, so does the ability to earn relatively less;
• Overall valuations are not overly attractive to investors;
• Legislative funding for the clean energy sector is not yet sufficiently certain at this stage.

Stocks and ETFs Common to the Sector

• New Era Energy NextEra Energy ( NEE )
• Duke ( DUK )
• The Southern Company ( SO )
• Consolidated Edison, Inc. (ED)
• American Electric Power Company American Electric Power Company, Inc. (AEP)
• NextEra Energy, Inc. (NEE)
• Utilities Select Sector SPDR Fund (XLU)
• Global X MSCI China Utilities ETF (CHIU)

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