A Stock Market Sector is simply a convenient way to compare and categorize stocks according to industry.
Two popular classifications include "Defensive" and "Cyclical" stocks with defensive stocks consisting of staple goods or utilities and cyclical stock sectors comprised of most everything else.
Stock market sectors allow you to compare a stock against others within the same industry; a prime consideration when investing.
Understanding stock market sectors can also help you balance risk versus growth to suit your own situation. For safety or to hedge against risk in a falling market look to defensive stocks like utility companies. This only makes sense; people don't suddenly stop taking hot showers because the market has taken a turn for the worse. Instead, they pay their electric bill to keep the hot water flowing and cut back in other areas.
Discover Defensive stocks that hold up well in Bear Markets