Sector

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What is a 'Sector'

A sector is an area of the economy in which businesses share the same or a related product or service. Economies are comprised of four sectors. The primary sector involves the extraction and harvesting of natural products from the earth (e.g., agriculture, mining and forestry). The secondary sector consists of processing, manufacturing and construction. The tertiary sector provides services, such as retail sales, entertainment and financial services. The quaternary sector is made up of intellectual pursuits, like education.

2. An industry or market sharing common characteristics. Investors use sectors to place stocks and other investments into categories like technology, health care, energy, utilities and telecommunications. Each sector has unique characteristics and a different risk profile.

BREAKING DOWN 'Sector'

1. Dividing an economy into different like-pieces allows for more in-depth analysis of the economy as a whole. Any economy can be divided into sectors, such as the economy of a particular city, or the global economy. The oil and gas sector is an example of an economic sector.

2. It is common for analysts to specialize in certain sectors. For example, at a large research firm, an analyst may cover only pharmaceutical companies. Investment funds often specialize in a particular economic sector, a practice known as sector investing.

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