NEW YORK >> Global stocks declined today as elevated U.S. Treasury yields again contributed to a lackluster close in an otherwise strong year for equities.

On Wall Street, early modest gains evaporated as the tech sector dropped 1.04%.

Some of the year’s top S&P 500 performers, including Palantir Technologies, Vistra Corp and Nvidia , closed lower on the day as investors continued to book profits, wrapping up a strong 2024 in which the benchmark S&P jumped 23.3% and the Nasdaq rose 28.7%.

The Dow Jones Industrial Average fell 29.51 points, or 0.07%, to 42,544.22, the S&P 500 dropped 25.31 points, or 0.43%, to 5,881.63 and the Nasdaq Composite slid 175.99 points, or 0.90%, to 19,310.79.

U.S. equities have surged this year, with the S&P 500 on track for its fifth annual gain in the past six years. The two-year jump of about 53.19% marks the strongest back-to-back annual performance for the index since 1997-1998.

The rally has been fueled by growth expectations surrounding artificial intelligence, expected interest rate cuts from the Federal Reserve, and more recently, the likelihood of deregulation policies from the incoming Trump administration.

But bond yields have risen on the Fed’s recent economic forecast and worries that President-elect Donald Trump’s policies including on tariffs, may prove inflationary. The benchmark 10-year U.S. Treasury note reached its highest level since May 2 at 4.641% last week, helping to cool the rally.

“There’s no Santa Claus rally this week, but investors received the gift of gains in 2024,” said Greg Bassuk, chief executive officer at AXS Investments in New York.

“2024 was a massive year for equity gains driven by a trifecta of the AI explosion, a slew of Fed interest rate cuts and a robust U.S. economy.”

SECOND-STRAIGHT YEARLY GAIN

MSCI’s gauge of stocks across the globe dipped 2.59 points, or 0.31%, to 841.24 but was set for a second-straight yearly advance after rallying almost 16% in 2024.

In Europe, the STOXX 600 index rose 0.51% but closed out the session with its biggest quarterly percentage drop in more than two years. It ended 2024 with a gain of 5.99%.

Trading volumes were subdued ahead of the New Year holiday on Wednesday. Stock markets in Germany, Italy and Switzerland were closed today, while those in the UK, Spain and France had a half-day trading session.

The benchmark U.S. 10-year note yield added 2.8 basis points at 4.573%, reversing an earlier decline but staying above the 4.5% mark that many analysts see as problematic for equities. The yield has risen about 69 basis points this year, including a surge of more than 74 bps in the fourth quarter.

Widening interest-rate differentials have increased the appeal of the dollar this year. The dollar index, which measures the greenback against other major currencies, is up 6.6% on the year after surging 7.3% in the fourth quarter, its biggest quarterly jump since the first quarter of 2015.

The dollar index today climbed 0.36% to 108.44, with the euro down 0.47% at $1.0358. The single currency is down 6.1% on the year versus the greenback after slumping 6.5% in the quarter.

Against the Japanese yen, the dollar strengthened 0.31% to 157.32. Sterling softened 0.28% to $1.2516.

U.S. crude settled up 1.03% to $71.72 a barrel and Brent settled at $74.64 per barrel, up 0.88% on the day as data showing an expansion in Chinese manufacturing was balanced by Nigeria targeting higher output next year. Oil prices were still set to close out 2024 with their second straight year of declines.

Additional reporting by Stephen Culp in New York, Johann M Cherian, Pranav Kashyap and Purvi Agarwal in Bengaluru.