In the past three months, the US stock market has undergone many changes, but one of the most noteworthy developments is the significant increase in the number of stocks outperforming the S&P 500 index.

As we enter July, the large stock indices largely rely on the gains of a small group of companies to drive the overall increase so far this year.

The darling of the artificial intelligence field.$NVIDIA (NVDA.US)$Companies may be the most prominent example. According to data cited by some analysts, this stock contributed approximately one-third of the S&P 500 index's gains in the first half of the year.

Data from Boston Partners shows that Nvidia, along with the so-called 'Seven Giants,' contributed nearly 60% of the index's gains.

Fast forward to the end of September, the situation looks dramatically different. Based on tracking over approximately three months, the number of individual stocks outperforming the S&P 500 has surged from around 20% in early July to nearly 70% by the end of September, the highest level since at least the early 1990s, referred to as the historical high by Kevin Gordon, Senior Investment Strategist at Charles Schwab & Co.

Nationwide's head of investment research, Mark Hackett, stated that according to this index, the stock market has never been this healthy. In an interview, he mentioned that four factors are coming together to drive the US stocks higher: breadth, sentiment, momentum, and improving economic backdrop.

In one interview, he said, "From the market's current performance, there are many positives. This tells me there is a very powerful force behind it. The percentage of companies outperforming historical levels, coupled with the Fed rate cut and China's stimulus measures."$S&P 500 Index (.SPX.US)$The unemployment rate fell from 4.2% in August to 4.1%; after several months of negative revisions to previous employment data, the job gains for July and August were revised upward by 72,000 people.

He asked, "If you were a hedge fund manager now, what motivation would you have to go short?"

If history is any indication, the S&P 500 index is likely to continue to rise in the fourth quarter, historically the best period for stock market returns.

The US non-farm payroll data for September indicates that the US economy remains strong, another bullish sign for US stocks. The addition of 104,000 more jobs than expected highlights the resilience of the labor market and may ensure a more cautious approach by the Fed in future rate cuts.

The unemployment rate fell from 4.2% in August to 4.1%; after several months of negative revisions to previous employment data, the job gains for July and August were revised upward by 72,000 people.

Goldman Sachs' multi-department investment manager Lindsay Rosner$Lindsay (LNN.US)$ Rosner) stated: "Last Friday's non-farm data was a grand slam, with strong positive revisions in employment data and a decrease in the unemployment rate. The economy is solidly entering its peak season."

Editor/rice