Chart of the Day: Rising Tide Fuels Rally

Individual stocks are getting swept up in this year’s rally.

Some 451 stocks within the S&P 500 are up for the year, tracking the second-highest total since 1980, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. In 2003, there were 458 stocks in the S&P 500 that finished the year in positive territory.

“The number is significant since it shows the depth of the recovery,” Mr. Silverblatt says.

The S&P 500 has rallied 23% in 2013 and finished Friday at a record high. The so-called momentum stocks, such as Netflix Inc.(NFLX) and Best Buy Inc.(BBY), have led the way. But a look at the rest of the market shows most stocks have also been coming along for the ride.

The pattern taking place today doesn’t always unfold during big rallies. The rally during the late 1990s proves this point. Back then, the tech bubble was forming and stocks were valued on “faith and hits as compared to sales and cash-flow,” Mr. Silverblatt says.

In 1998, the S&P 500 jumped 27%. And yet just 58% of stocks in the index rose that year. A similar pattern took place in 1999, when the S&P 500 jumped 20%, but only 48% of stocks finished the year higher.

This year has been quite a different story. About 90% of S&P 500 stocks are trading higher, with the average stock price up about 23% for the year.

Netflix and Best Buy have been the S&P 500′s biggest-gaining stocks this year, up by more than 200% apiece. There are seven stocks in the index that have more than doubled this year.

Conversely, there are only 18 stocks in the S&P 500 that are down by at least 10% this year. J.C. Penney(JCP) has been the biggest loser; the stock’s 65% drop has pushed the company’s market capitalization down $2.1 billion, the lowest in the index.

Newmont Mining Corp.(NEM) and Cliffs Natural Resources Inc.(CLF) are respectively down by more than 30% in 2013.

A combination of slowly growing earnings, a gradually improving economy and a highly accommodative Federal Reserve has driven the stock market to unchartered territory.

Mr. Silverblatt also suggests performance-chasing has played a role in the big rally and could continue through year-end.

“Chasing returns is not a good reason to invest, but when enough do it, the short-term impact is more buying and higher prices, which we may be getting close to if the market stays anywhere near its current level,” Mr. Silverblatt says.