In our previous article, “What exactly is ‘The Market’?”, we talked about each of the major indexes that cover about 98% of the investable equities market in the United States. For this article, we’re going to dive deeper into the S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. large capGlossary: A company's share price times its number of shares outstanding: the total value the market puts on the company. index and break it apart into its individual sectorsGlossary: One of the 11 groups the stock market is split into by line of business, like technology, healthcare or energy. Every company in the S&P 500 belongs to exactly one. because there’s a lot of valuable information hidden beneath the surface.
The S&P 500 index is divided into 11 distinct sectors. These sectors categorize each company based on its primary business activity, helping investors track specific areas of the stock market.
Communication Services connects the world through digital media, entertainment, and cellular networks, anchored by tech giants like Alphabet and Meta. Next is Consumer Discretionary, which powers non-essential spending on primarily retail items through companies like Amazon.
In contrast, Consumer Staples anchors the market with recession-proof, everyday household necessities from manufacturers like Procter & Gamble and Coca-Cola. Powering these factories and the nation at large is the Energy sector, focused on procuring and refining oil and gas via heavyweights like ExxonMobil and Chevron.
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