What Are the Sectors and Industries of the S&P 500?

What Are the Sectors and Industries of the S&P 500?



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Understanding the Makeup of the Economy, Stock Market, and Stock Market Indices





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BY JOSHUA KENNON

 

Updated February 14, 2018

One of the most important concepts new investors in the stock market need to learn has to do with sectors and industries.  I want to take a few moments to walk you through the definition of these concepts, explain what they are in practical terms, and show you how they fit into one of America's largest stock market indices, the S&P 500.  Though it will only take a brief amount of your time, you'll be glad you learned the difference once and for all.

What Is the Difference Between a Sector and an Industry?

The general economy and stock market are organized into two tiers. The highest tier, a sector, is a broad grouping of companies that have similar economic characteristics. There are currently 10 major sectors that most investors use when breaking down the corporations and other issuers of securities such as stocks and bonds.

Sectors, in turn, are broken down into sub-categories known as industries. This allows a closer grouping of similar businesses. For example, both Walmart, the discount retail chain, and Tiffany & Company, the luxury jeweler, are included in the consumer discretionary sector. However, they are sorted into different industries.

What Are the Advantages of Paying Attention to Sectors and Industries?


Examining sectors and industries allows you compare one business to its closest competitors. You may think a certain stock is a good purchase, but until you research its rivals, you won't know for sure. 

Looking at sectors and industries also helps you become familiar how businesses interact with another. For example, if you believe that energy prices are going to decline, you might find transportation stocks appealing, because you believe one of the biggest cost inputs—gasoline and jet fuel—is about to plummet. When combined with disciplined, long-term, tax-efficient, low-turnover, highly passive investing, this knowledge can be a ticket to building wealth.

It's also now possible to invest in an entire sector or industry with one purchase. Rather than buy shares of every company in a given industry or sector, you can get exposure to all of them in a single investment. With exchange traded funds (ETFs) smaller investors can often buy a diversified basket of an entire grouping, often with little to no commission and expense ratios that are typically less than 0.50% to 1.00%. These ETFs are similar to mutual funds but trade like stocks, and allow an investor to get exposure to a wide range of investments in a sector or industry without needing to research individual stocks.

 

Many financial advisors recommend that investors try to maintain a portfolio that offers good exposure to all of these industries and sectors. 


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For now, let's dive into the sector and industry breakdown of the United States stock market as a whole. I'm going to use the S&P 500 index as a proxy for the stock market. As of the most recent stock market close on February 26th, 2016, the total value of all stocks in the S&P 500 index came to $17.87 trillion.

Consumer Discretionary Sector of the S&P 500

The consumer discretionary sector consists of businesses that have demand which rises and falls based on general economic conditions such as washers and dryers, sporting goods, new cars, and diamond engagement rings.  At present, the consumer discretionary sector contains twelve industries. Examples of consumer discretionary stocks include Apple, Disney, and Starbucks. 

Automobile Components Industry





Automobiles Industry





Distributors Industry





Diversified Consumer Services Industry





Hotels, Restaurants & Leisure Industry





Household Durables Industry





Internet & Catalog Retail Industry





Leisure Products Industry





Media Industry





Multiline Retail Industry





Specialty Retail Industry





Textile, Apparel & Luxury Goods Industry



Internet & Direct Marketing



As of February 13th, 2018, the total value of all consumer discretionary stocks in the United States came to $5.58 trillion, or about 12.7% of the market. 

Consumer Staples Sector of the S&P 500

The consumer staples sector consists of businesses that sell the necessities of life, ranging from bleach and laundry detergent to toothpaste and packaged food. At present, the consumer staples sector contains six industries and includes companies such as Procter & Gamble, Kroger, and Anheuser Busch InBev.

Beverages Industry





Food & Staples Retailing Industry





Food Products Industry





Household Products Industry





Personal Products Industry





Tobacco Industry



As of February 13, 2018, the total value of all consumer staples stocks in the United States came to $3.46 trillion, or about 7.9% of the market. This is a particularly interesting sector because it is one of the few that disproportionately produces rich shareholders over long periods of time.

Energy Sector of the S&P 500

The energy sector consists of businesses that source, drill, extract, and refine the raw commodities we need to keep the country going, such as oil and gas.  At present, the energy sector contains two industries.

Energy Equipment & Services Industry





Oil, Gas & Consumable Fuels Industry



As of February 13, 2018, the total value of all energy stocks in the United States came to $3.55 trillion, or about 5.7% of the market. Falling energy prices have made energy stocks a declining part of the S&P 500 in recent years. Major energy stocks include Exxon Mobil, Chevron, and Halliburton.

Financials Sector of the S&P 500

The financial sector consists of banks, insurance companies, real estate investment trusts, credit card issuers, and a host of other money-centric enterprises that keep the debits and credits of the economy flowing.  At present, the financial sector contains eight industries.

Banking Industry





Capital Markets Industry





Consumer Finance Industry





Diversified Financial Services Industry





Insurance Industry





Real Estate Investment Trusts (REITs) Industry





Real Estate Management & Development Industry





Thrifts & Mortgage Finance Industry



As of February 13, 2018, the total value of all financial stocks in the United States came to $7.87 trillion, or about 14.9% of the market. JPMorganChase, GoldmanSachs, and Bank of America are all examples of financial stocks. 

Health Care Sector of the S&P 500

The health care sector consists of drug companies, medical supply companies, and other scientific-based operations that are concerned with improving and healing human life.  At present, the health care sector contains six industries.

Biotechnology Industry





Health Care Equipment & Supplies Industry





Health Care Providers & Services Industry





Health Care Technology Industry





Life Sciences Tools & Services Industry





Pharmaceuticals Industry



As of February 13, 2018, the total value of all health care stocks in the United States came to $4.88 trillion, or about 13.95% of the market. Examples of health care stocks include Johnson & Johnson, Gilead, and Pfizer.

Industrials Sector of the S&P 500

From railroads and airlines to military weapons and industrial conglomerates, the industrial sector makes it possible for modern civilization to exist. At present, the industrial sector contains fourteen industries.

Aerospace & Defense Industry





Air Freight & Logistics Industry





Airlines Industry





Building Products Industry





Commercial Services & Supplies Industry





Construction & Engineering Industry





Electrical Equipment Industry





Industrial Conglomerates Industry





Machinery Industry





Marine Industry





Professional Services Industry





Road & Rail Industry





Trading Companies & Distributors Industry





Transportation Infrastructure Industry



As of February 13, 2018, the total value of all industrial stocks in the United States came to $4.16 trillion, or about 10.2% of the market. Major industrial stocks include Lockheed Martin, CSX, and U.S. Steel. 

Information Technology Sector of the S&P 500

The Information Technology, or IT, sector is home to the hardware, software, computer equipment, and IT services operations that make it possible for you to be reading this right now. From microprocessors to printers, operating systems to cell phone handsets, recent advances in technology have turned IT into a giant part of the domestic and global economies. At present, the information technology sector contains eight industries. 

Communications Equipment Industry





Electronic Equipment, Instruments & Components Industry





IT Services Industry





Internet Software & Services Industry





Semiconductors & Semiconductor Equipment Industry





Software Industry





Technology Hardware, Storage & Peripherals Industry



As of February 13, 2018, the total value of all information technology stocks in the United States came to $8.75 trillion, or about 24.1% of the market. It is the largest sector in the S&P 500. Top IT stocks include Microsoft, Dell, and Alphabet. 

Materials Sector of the S&P 500

The building blocks that supply the other sectors with the raw materials it needs to conduct business, the material sector manufacturers, logs, and mines everything from precious metals, paper, and chemicals to shipping containers, wood pulp, and industrial ore. At present, the material sector contains five industries.

Chemicals Industry





Construction Materials Industry





Containers & Packaging Industry





Metals & Mining Industry





Paper & Forest Products Industry



As of February 13, 2018, the total value of all materials stocks in the United States came to $2.19 trillion, or about 2.15% of the market. Major materials stocks include DowDupont, Ecolab, and International Paper.  

Telecommunication Services Sector of the S&P 500

From telephone access to high-speed internet, the telecommunication services sector of the economy keeps us all connected.  At present, the telecommunication services sector is made up of two industries:

Diversified Telecommunication Services





Wireless Telecommunication Services



As of February 13, 2018, the total value of all telecommunication services stocks in the United States came to $1.70 trillion, or a little less than 2% of the market. The telecommunications industry includes stocks such as AT&T, Verizon, and T-Mobile. 

Utilities Sector of the S&P 500

The utilities sector of the economy is home to the firms that make our lights work when we flip the switch, let our stoves erupt in flame when we want to cook food, make water come out of the tap when we are thirsty, and more.  At present, the utilities sector is made up of five industries.

Electric Utilities Industry





Gas Utilities Industry





Independent Power and Renewable Electricity Producers Industry





Multi-Utilities Industry





Water Utilities Industry



As of February 26th, 2016, the total value of all utilities stocks in the United States came to $1.19 trillion, or about 2.8% of the market. It is the smallest sector of the S&P 500. Utlities stocks include many local electricity and water companies including Exelon, Dominion Resources, and NV Energy. 

 https://www.thebalance.com/what-are-the-sectors-and-industries-of-the-sandp-500-3957507?_ga=2.70837398.700833417.1539099278-1547547227.1533468573