The stock market is divided into 11 sectors: Technology, Healthcare, Financials, Consumer Discretionary, Consumer Staples, Energy, Utilities, Real Estate, Materials, Industrials, and Communication Services. Each sector responds differently to economic conditions.
Cyclical sectors (Technology, Financials, Consumer Discretionary) tend to outperform during economic expansion but decline sharply during recessions. Defensive sectors (Utilities, Consumer Staples, Healthcare) hold up better during downturns because demand for their products remains relatively stable.
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