• Authors
  • Contact Us
  • Home
  • ETFs
  • Crypto
  • Investment Products
    • Bonds
    • Shares
  • How To Guides
  • Stocks
  • News
  • About Us
  • Contact Us
No Result
View All Result
  • Home
  • ETFs
  • Crypto
  • Investment Products
    • Bonds
    • Shares
  • How To Guides
  • Stocks
  • News
  • About Us
  • Contact Us
No Result
View All Result
Home News

S&P 500 Industry Classifications

Elizabeth Green by Elizabeth Green
March 2, 2023
in News, Stocks
Reading Time: 5 mins read
sp500 industry classifications
Share on FacebookShare on Twitter

When you are investing in a stock, it’s probably a good idea to understand which industry the company is in. The S&P 500 is split into 11 industries, and stocks within sectors (sometimes) move together. In this short note, we will look at each of the sectors and think about some typical constituents.

The stock market can be a complex and intimidating place for beginners, but understanding the different industries and sectors can help make the process of investing much easier. Grouping companies into industries can help simplify the process of diversifying your portfolio, and by understanding the characteristics of different industries, investors can make informed decisions about where to allocate their funds.

Technology Sector

The technology sector is the largest S&P sector and includes companies involved in the development, manufacturing, or distribution of tech-related products and services. These companies produce computer software programs or electronic hardware and research and develop new technologies. Tech stocks are typically cyclical, performing better in stronger economies. However, during the COVID-19 pandemic, many tech stocks saw a boost as demand for things like video-conferencing platforms and cloud storage increased with the adoption of remote work. Some of the biggest tech stocks include Facebook (META), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), and IBM (IBM).

Health Care Sector

The healthcare sector includes pharmaceutical companies, companies that produce or distribute medical equipment and supplies, and companies that conduct healthcare-related research. The healthcare sector also includes alternative health companies such as GW Pharmaceuticals, a drug developer focused on cannabis. Traditional healthcare companies include CVS (CVS), Johnson & Johnson (JNJ), UnitedHealth Group (UNH), Thermo Fisher Scientific (TMO), and Regeneron (REGN). Healthcare stocks are typically non-cyclical, as demand for these products and services usually doesn’t hinge on economic movements.

Financials Sector

The financial sector covers a variety of industries, including banking and investing. Banks, credit unions, mortgage companies, wealth management firms, credit card companies, and insurance companies are all part of the financial sector. Financial services companies are usually categorised as cyclical. For example, a credit card issuer’s profit margins may shrink during a recession if unemployment rises and people spend less or cannot keep up with credit card payments. However, mortgage companies may benefit during recessionary periods if lower interest rates spur home-buying activity. Some of the biggest names in the financial sector include Visa (V), JPMorgan Chase (JPM), Bank of America (BAC), PayPal Holdings (PYPL), and Mastercard (MA).

Real Estate Sector

Real estate is a relatively new addition to the S&P sectors list and includes real estate investment trusts (REITs), realtors, developers, and property management companies. REITs invest in income-producing properties and pay 90% of profits out to investors as dividends. Investing in real estate can be a defensive move as this sector is largely uncorrelated with stocks. So, if stock prices fall, investors may not see a correlating drop in real estate investments as property generally tends to appreciate over time. Examples of real estate companies in the S&P 500 include Digital Realty (DLR), American Tower (AMT), Prologis (PLD), Simon Property Group (SPG), and Boston Properties (BXP).

Energy Sector

The energy sector includes companies that participate in the production and/or distribution of energy. That includes the oil and gas industry as well as companies connected to the development or distribution of renewable energy sources. Energy stock investments can be more sensitive to economic movements and supply-demand trends compared to other sectors. Some of the biggest energy sector companies include Exxon Mobil (XOM), Royal Dutch Shell (SHEL), Chevron (CVX), ConocoPhillips (COP), and Halliburton (HAL). 

Materials Sector

The materials sector includes companies connected to the sourcing, processing, or distributing of raw materials. That includes things like lumber, concrete, glass, and other building materials. Materials are one of the cyclical S&P sectors, as it can be driven largely by supply and demand. During a housing boom, for example, the materials sector may benefit from increased demand for lumber, plywood, and other construction materials. Material stocks in the S&P 500 include Dupont (DD), Celanese (CE), Sherwin Williams (SHW), Air Products & Chemicals (APD), and Eastman Chemical (EMN). 

Consumer Discretionary Sector

The consumer discretionary sector is a largely cyclical sector that includes companies in the hospitality and entertainment sectors, as well as retailers. Generally, these companies represent things consumers may spend more money on in a thriving economy and cut back on during a downturn. Examples of stocks that fit into the consumer discretionary sector are Starbucks (SBUX), AMC (AMC), Best Buy (BBY), Home Depot (HD), and Nike (NKE). 

Industrials Sector

The industrial sector covers a broad range of industries, including those in the manufacturing and transportation sectors. Industrials are often considered to be cyclical stocks, again because of how they react to changes in supply and demand. The airline industry, for example, saw a steep decline in 2020 as air travel was curtailed due to the coronavirus pandemic. Some examples of industrial sector stocks include Honeywell (HON), 3M (MMM), Stanley Black & Decker (SWK), Delta Airlines (DAL), and Boeing (BA). 

Utilities Sector

Utilities represent one of the core defensive S&P sectors. This sector includes companies that provide gas, electricity, water, and other utilities to households, businesses, farms, and other entities. Since these are essentials that people typically can’t do without, they’re generally less sensitive to major shifts in the economic cycle. They also often pay dividends to their investors. Examples of utility stocks include AES (AES), UGI (UGI), CenterPoint Energy (CNP), Duke Energy (DUK), and Dominion Energy (D). 

Consumer Staples Sector

Consumer staples stocks represent things consumers regularly spend money on. That includes groceries, household products, and personal hygiene products. The consumer staples sector is also a defensive sector because even when the economy hits a rough spot, consumers will continue spending money on these things. Companies that are recognized as some of the top consumer staples stocks include General Mills (GIS), Coca-Cola (KO), Procter & Gamble (PG), Conagra Brands (CAG), and Costco Wholesale (COST). 

Communications Sector

Last, but not least on the list of S&P sectors is the communications sector, which spans companies that provide communications services of some kind. That can include landline phone services, cellular phone services, or internet services. Communications also include companies responsible for producing movies and television shows. The communications sector can be hard to pin down in terms of whether it’s cyclical or defensive. In a down economy, for example, people may continue to spend money on phone and internet services but cut back on streaming services. Companies that belong to this sector include Comcast (CMCSA), AT&T (T), Dish Network (DISH), Discovery Communications (WBD), and Activision Blizzard (ATVI).  Overall, it is important to remember that the sector or industry can relate similar stocks together, but it is important to understand the stocks within these categories can be completely different and have completely different returns. Always talk to a qualified professional before investing.

Discover valuable insights and tips for successful investing by reading our previous post on investing lingo. Click the link to access it now.

What is an ETF?
Elizabeth Green

Share78Tweet49
Elizabeth Green

Elizabeth Green

Related Posts

The ultimate ETF Guide

What is an ETF and How Does It Work? A Complete Guide

by Caroline Massey
February 20, 2024

Ok, so people in the UK don’t invest (well not enough anyway), with just 8% of British people having investments...

UK House Prices

UK House Prices: A Turning Tide for Investors?

by Elizabeth Green
December 1, 2023

As its getting colder the United Kingdom, something intriguing is happening in the housing market. For the third consecutive month,...

A New Era in AI Development

OpenAI’s Leap Forward with Q: Revolutionizing AI Development

by Katherine White
November 28, 2023

In a stunning turn of events that has the tech world abuzz, Sam Altman, the former CEO of OpenAI, has...

Warren Buffet the Oracle of Omaha

Warren Buffett: The Oracle’s Apple Investment Mastery

by Katherine White
November 15, 2023

Warren Buffett, known globally as the "Oracle of Omaha," is a testament to the power of shrewd and careful investing...

Shell Amplifies Shareholder Returns Amidst Profit Dip

Shell’s Strategic Shift and Shareholder Returns

by Katherine White
November 2, 2023

As a cornerstone of the energy sector, Shell plc has long been known for the relentless pursuit of energy innovation...

Load More
Next Post
commodity investment

Is investing in a commodity a good idea?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Table of Contents

  • S&P 500 Industry Classifications
  • Home
  • ETFs
  • How To Guides
  • Cryptocurrency
  • News
  • Contact Us

© 2025 Web Design by Turtle Media.

No Result
View All Result
  • Home
  • ETFs
  • Crypto
  • Investment Products
    • Bonds
    • Shares
  • How To Guides
  • Stocks
  • News
  • About Us
  • Contact Us

© 2025 Web Design by Turtle Media.