There are ten major sectors to the economy:
First up is the telecommunications sector. This sector includes Wireless companies such as Sprint and Verizon.
Next we have the materials sector, which focuses on focuses on raw goods such as steel and plastics.
The utilities sector focuses on the physical infrastructure for power, water, and gas. Pacific Gas and Electric is an example of a utility company.
Next is the Industrials sector, which focuses on large-scale manufacturing. Car companies such as Ford and Chrysler are included in the industrials sector.
The information technology sector focuses on software, hardware, and the internet, and is made up of companies such as Google, Apple, and Cisco.
The healthcare sector is largely made up of pharmaceutical companies such as Merck and GlaxoSmithKline.
The financial sector covers all Investment banks and bank holding companies, including Goldman Sachs and Citigroup. This sector also includes the insurance industry.
Next up with we have the consumer staples sector. This sector includes companies such as Proctor and Gamble, which manufacture household goods such as cleaning supplies, toothpaste, and toilet paper.
The consumer discretionary sector includes the major media companies, such as News Corporation and Disney.
Finally, the largest of all markets is the energy sector, which covers oil, gas, and the burgeoning solar space. It is represented by companies such as Exxon, Chevron, and British Petroleum.
The companies within each sector need to be evaluated differently. It doesn’t make sense to compare a tech company like Google to an energy company like Exxon Mobil. On the other hand, comparing Exxon to another oil company like Chevron or British Petroleum can help you make an educated investment decision. This is why it makes sense to classify stocks based on sector.
