Sector indices are financial metrics that track the performance of specific sectors within the economy, such as technology, healthcare, or energy. They group together companies that operate in the same industry, allowing investors to analyze trends and make informed decisions based on sector performance. These indices, like the S&P 500 or NASDAQ, provide a benchmark for comparing individual stocks against their sector. By monitoring sector indices, investors can identify which industries are thriving or struggling, helping them to allocate their investments more effectively and manage risk.