Technology stocks are on track to close 2009 with their best yearly performance since 1999, as investors' optimism for an economic recovery continues to push the S&P 500 to new 52-week highs. 

Since the beginning of the year, the technology sector is leading the gains, up 54.6%, followed by the materials and consumer discretionary sectors, rising 42.7% and 38.5%, respectively.  The last time the technology sector had a gain greater than 54% was in 1999, posting a gain of 78.4% for the year (let's hope 2010 does not repeat what happened to the tech sector at the start of 2000). 

This year's gains in technology, however, are in part a rebound from a 44% drop in 2008, when technology finished the year as the third worst performing sector, behind financials and materials stocks. 

So far in 2009, technology companies in the S&P 500 have an average percent gain of 63.3%, and a median value of 46.4%.  Indeed, of the 74 stocks that constitute the tech sector, only three companies are trading in negative territory for the year -MEMC Electronic Materials (WFR), Lexmark Intl. (LXK) and Flir Systems (FLIR).

Among the ten major sectors in the S&P 500 index, telecommunication stocks are up the least, with a gain of 1.6%.  A clear trend has developed this year, with three sectors outpacing the rest of the group, as depicted on the bar chart below. 

Investors seeking opportunities for 2010 may benefit from looking at these trends, determining if valuations are now stretched or there is further room to the upside.  What follows is an overview of the top performing sectors in the S&P 500, along with a peek at at the biggest percent gainers year-to-date. 

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