Sector Rotation

How money moves between the 11 market sectors, what offense and defense look like, and a real 2026 example where energy rose while technology fell.

The 11 sectors

The stock market is commonly divided into 11 sectors: communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate and utilities. Each sector groups companies whose businesses respond to similar forces. Sector funds, such as XLK for technology and XLE for energy, make it easy to track each group’s performance.

Sector rotation is the movement of money from one sector to another as investors’ expectations change. It is one of the most visible forces in the market, and learning to spot it helps you fish where the fish are.

A rough split: cyclical and growth sectors play offense, defensive sectors play defense.

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