After a brutal 2022, the S&P 500 (SNPINDEX: ^GSPC) has rebounded nicely this year and was up 13% in 2023 at the time of this writing. But according to Slickcharts, only 147 of the 503 S&P 500 stocks are beating the index this year. Possibly more perplexing, half of S&P 500 stocks have a negative year-to-date return. 

Let's break down the disconnect between the index's performance and the performance of individual stocks so we can learn about the dynamics of the S&P 500, the importance of diversification, and why holding through periods of volatility is the best way to smooth out the randomness that can come from a given year.

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Source Fool.com