Glossary
Sector
A broad group of companies in related lines of business, such as energy or health care; the GICS system defines 11 sectors.
On this page
A sector is a large grouping of companies whose businesses are related, such as energy, financials or health care. Investors use sectors to compare companies with genuine peers, to understand what drives a stock, and to measure how diversified a portfolio really is. Companies in the same sector tend to respond to the same forces, such as oil prices for energy or interest rates for banks.
How it works
The most widely used system is the Global Industry Classification Standard (GICS), developed by MSCI and S&P Dow Jones Indices. It sorts each company by its main source of revenue into a four-level hierarchy: 11 sectors, 25 industry groups, 74 industries and 163 sub-industries, as of the 2023 revision. The 11 sectors are:
| Sector | Sector |
|---|---|
| Energy | Financials |
| Materials | Information Technology |
| Industrials | Communication Services |
| Consumer Discretionary | Utilities |
| Consumer Staples | Real Estate |
| Health Care |
Classifications can change. S&P DJI and MSCI ran a consultation through October 30, 2026 on possible changes, with results due by November 2026.
How sectors are used
- Comparisons. Valuation ratios and margins make most sense against companies in the same sector.
- Performance tracking. Sector ETFs and index breakdowns show which parts of the market are leading.
- Economic sensitivity. Sectors such as consumer discretionary and industrials are cyclical; consumer staples, utilities and health care are considered defensive.
Classification is imperfect. Large companies with several businesses get one label, and some well-known companies sit in surprising places, such as major internet platforms in Communication Services.