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A sector is a segment of the economy that includes companies providing the same types of products or services.
For example, the utility sector provides electric power, natural gas, water, or a combination of these services. This sector may also include companies who produce power and those that trade it.
Companies within a sector tend to be reasonably consistent in their average earnings per share, price/earnings ratios (P/Es), and other fundamentals. But fundamentals may differ substantially from one sector to another. For example, some sectors are cyclical, rising and falling with changes in the economy while others are defensive, maintaining their strength despite economic ups and downs.
Since there's no official list of sectors, there can be confusion about how many sectors there are, what they're called, and what companies are included in them. For example, transportation is sometimes a standalone sector and sometimes included as part of the industrial sector.
Sector indexes, some of which are broad while others are very narrow, track many of the major sectors of the economy.