Stocks closed lower on Tuesday as investors wrapped up another booming year that hoisted the S&P 500 to its second consecutive annual gain exceeding 20%, spurred by enthusiasm for rate cuts, economic strength and artificial intelligence.

The broad market index closed 0.43% lower at 5,881.63, while the Nasdaq Composite dipped 0.9% to 19,310.79 on 2024's final day of trading. The Dow Jones Industrial Average slipped just 0.07%, or 29.51 points, lower to 42,544.22.

The S&P 500 surged 23.31% in 2024, building on a gain of 24.2% from last year. The two-year gain of 53% is the best since the nearly 66% rally in 1997 and 1998.

Meanwhile, the Dow added 12.88% in 2024, while the Nasdaq has outperformed with a gain of 28.64%.

The enthusiasm surrounding AI and its potential productivity boost helped power the major averages to a string of record highs throughout the year. AI chip darling Nvidia and iPhone giant Apple — members of the so-called Magnificent 7 — rose 171% and 30%, respectively, and notched new highs of their own in 2024.

Developments in Washington, D.C., helped fuel the rally in the second half of the year. The Federal Reserve has cut its benchmark interest rate by a full percentage point since September, bolstering confidence that the U.S. economy can sustain its recent growth. Stocks also rallied sharply following President-elect Donald Trump's win in November, as traders cheered the prospect of lower taxes and a looser regulatory approach under a Republican administration.

Bank stocks in particular were one group that surged after the election, with JPMorgan and Goldman Sachs closing up about 41% and 48%, respectively, year to date. Shares of Tesla, whose CEO Elon Musk is a close ally of Trump, finished the year up more than 62%.

Meanwhile, bitcoin has performed even better than the stock market, up 119% for the year. Notably, the cryptocurrency topped $100,000 for the first time this year.

"I think a lot of what drove that enthusiasm is you had good developments on all those fronts in 2024. You had inflation on a downward trajectory, the Fed coming out aggressively in September when they started cutting rates," said Yung-Yu Ma, chief investment officer for BMO Wealth Management. "And for a lot of the time you had a 10-year Treasury yield that was very well behaved, along with earnings growth. So you got everything together at once that was going well."

In the fourth quarter, the Nasdaq and S&P gained 6.2% and 2.1%, respectively, for a fifth consecutive positive quarter for the first time since 2021. The Dow is up a mere 0.5% during the same period for its fourth positive quarter in five.

Despite the strong year-to-date performance, Wall Street struggled in December's final days, with investors taking profits in some of 2024's biggest winners and fears mounting over rising rates into year-end. The Dow ended the month down 5.3%. The S&P fell 2.5%, while the Nasdaq grinded out a gain of 0.5%.

"If we have high valuations, and a lot of this is priced in, what is the next catalyst for the next 10% move? And if that's not obvious, then I think, at least right now at the end of the year, we're just getting people locking in a lot of profits," Ma added.

Investors were hoping for a Santa Claus rally, which occurs when the market rises during each of the five final trading days of a calendar year and the first two trading days of January. Instead, the S&P 500 ended the year with four-straight down days for the first time since 1966. Apple and Nvidia both fell on Friday for their third negative session in four.

The market is closed on Wednesday for New Year's Day.

Stocks close lower in final day of year

The stock market will be slumping into the new year after the major averages coughed up early gains Tuesday and closed lower for the session.

The S&P 500 finished down 0.4%, while the Nasdaq Composite dropped 0.9%. The Dow lost almost 30 points, or about 0.1%.

— Jesse Pound

Market momentum slows in the fourth quarter

The fourth quarter is typically by far the best quarter of the year for stocks. Since 2000, the S&P 500 has averaged a gain of more than 4% in the final quarter. That is double the 2% average gain in the second quarter and way better than the fractional average gains in the first and third quarters.

S&P 500's Average Gains Since 2000
Q1         +0.7%
Q2         +1.9%
Q3         +0.1%
Q4         +4.2%

But 2024 has been strikingly different. For the first time since 2018, the fourth quarter wound up being the weakest quarter of the year. The S&P 500 is up less than 2% as Big Tech momentum slowed in the year's final weeks. That is a stark contrast to 2021-23 when the last three months carried the index's overall gains for that year.

Instead, for the first time since 2019, it was the first quarter that fared the best this year:

S&P 500's 2024 Gains
Q1         +10.2%
Q2         +3.9%
Q3         +5.5%
Q4         +1.9%

— Robert Hum

Intel heads for worst year on record

Intel shares have plunged more than 60% this year, putting the chipmaker on pace for its worst yearly performance in its 56-year history.

The stock has come under pressure since the launch of ChatGPT set the artificial intelligence revolution ablaze. Investors shunned the company for lagging behind AI leaders such as Nvidia and Advanced Micro Devices. Intel's misfortunes also resulted in the ousting of CEO Pat Gelsinger earlier this month.

This month alone, the stock has plummeted about 17%.

— Samantha Subin

U.S. Steel shares jump after report of new Nippon Steel proposal

Shares of U.S. Steel jumped 7% after the Washington Post reported that Nippon Steel sent the Biden administration an updated acquisition proposal.

The new proposal would give the U.S. government veto power over any reduction in U.S. Steel's "production capacity" as part of allowing a Japanese firm to take a strategically important company, the report said.

Even with Tuesday's move, shares of U.S. Steel are down about 34% year to date.

— Jesse Pound

10-year Treasury yield closes year above 4.5%

The U.S. bond market has wrapped up its year, with the 10-year Treasury yield moving slightly higher on the final day of trading to 4.57%. Bond yields move opposite of price.

Phillip Toews, CEO and portfolio manager at Toews Corporation, said a potential move above 5% for the 10-year yield is a risk for Wall Street entering the new year.

"A continued trend like that looks really bad for both the stock and the bond market. And that could just easily happen, even absent Fed action, even absent inflation being even more stubborn if it has been, if the yield curve just normalizes," Toews told CNBC.

— Jesse Pound

Palantir, Nvidia among top-performing S&P 500 stocks this year

It has been a strong year for the S&P 500 — and some stocks are more to thank than others.

Here are the best-performing S&P 500 members for 2024, as of Tuesday:

1. Palantir: Up 350.3%
2. Vistra Corp.: Up 262.2%
3. Nvidia: Up 177.7%

CNBC Pro subscribers can click here to read more about what drove these stocks higher this year.

— Alex Harring

Small caps underperform for another year

Small-cap stocks missed out on some of the broader market's gains once again in 2024 as investors continued chasing technology and other large growth stocks.

The small cap-focused Russell 2000 has added 10.2% this year, as of midday Tuesday. By comparison, the broad S&P 500 has surged around 23.5% on the year.

That extends the performance gap seen in 2023. That year, the Russell 2000 climbed just over 15%, while the S&P 500 soared more than 24%.

The Russell 2000 has underperformed the S&P 500 every calendar year since 2021 began.

— Alex Harring

See the stocks moving midday

These are some of the stocks making midday moves in the final trading session of 2024:

• Nvidia — The artificial intelligence darling shed more than 1% as traders took profits at the tail end of another banner year for shares. The stock is on track to finish 2024 up nearly 175%.
• Biohaven — The biopharmaceutical stock popped more than 1% after director John Childs disclosed a purchase of 29,000 shares.

See the full list here.

— Alex Harring

These are 2024's best and worst Nasdaq performers

The Nasdaq Composite is on pace for another winning year, with the tech-heavy index up more than 29% and the concentrated Nasdaq-100 on pace for a more than 25% gain.

AppLovin is far and away the top gainer in the Nasdaq-100, with shares up more than 700%. MicroStrategy is the second-best performer, up more than 370% amid the rise in cryptocurrencies, while Palantir Technologies has surged nearly 350%.

Nvidia is on pace for a 173% gain as artificial intelligence tailwinds show no signs of dwindling, while shares of Broadcom and Axon Enterprise have more than doubled.

But 2024 hasn't been such a rosy year for every stock in the index. Intel is the worst performer, with shares down more than 60%. MongoDB and Biogen have slumped at least 40%, while Dexcom and Microchip Technology have shed at least 36% each.

— Samantha Subin

S&P 500 trying to avoid a dubious end to a stellar year

Having fallen three straight sessions entering the final day of trading, the S&P 500 is trying to avoid its first four-day losing streak to close out a year since 1966.

Despite going out of 2024 with a whimper, the S&P 500 is still poised for a 24% gain for the second straight year. Consecutive gains of 20% or more are extremely rare. It has only happened three other times for the S&P 500: 1935-36, 1954-55 and 1996-98 (the only time it saw 20% gains three years in a row).

Here's another sign that the S&P 500's gains have been very top-heavy this year, primarily thanks to the tremendous outperformance from big cap techs. Only about one-fourth of the S&P 500 is up 24% or more in 2024 (24% being the index's gain this year).

Meanwhile, in terms of overall breadth, two-thirds of the index is up this year, leaving one-third in the red.

— Robert Hum

Only a handful of stocks bucked the S&P 500's decline this month

Stocks had a rough December — and only a handful of tech stocks bucked the trend.

The S&P 500 declined about 1.8% this month. The Dow Jones Industrial Average fell 4.9%, meanwhile, and only the tech-heavy Nasdaq Composite managed to finish higher, rising about 1.4% month to date.

Most stocks in the S&P 500 ended the month in the red, with only a few more than 60 names in the broad market index managing to come out higher.

Broadcom, Tesla and Lululemon were the top gainers, respectively. Broadcom gained a whopping 44% this month alone, while Tesla gained more than 21.5%. Megacap tech stocks Alphabet, Amazon and Apple also ended higher. Outside of technology, Boeing, Ulta Beauty and Darden Restaurants raked in gains in December.

Texas Pacific Land, CVS Health, UnitedHealth and Omnicom Group were among the biggest losers, as were several homebuilders, including Lennar, Builders FirstSource and Pultegroup.

— Pia Singh

Palantir could go ‘much higher from here,’ Dan Ives says

Investors shouldn't be worried about Palantir Technologies' current valuation levels, according to Wedbush's Dan Ives.

As it stands, the stock has a forward price-to-sales ratio of around 50, per data from FactSet. It has also soared around 346% year to date. But Ives thinks the stock could have even more room to run.

"It's not about in the next year in terms of what this thing is trading at," the analyst told CNBC's "Squawk on the Street" on Tuesday. "I view it as: Can Palantir be the next Oracle, the next Salesforce? If that's true — and I believe that's true — then this is a name that goes much higher from here."

"That's why you've got to focus on [artificial intelligence platform] as they prove out these sort of enterprise use cases and can this be something that expands to ultimately 30% [or] 40% of its overall revenue. I think that's the key," he continued. "This is a stock that has potential to be three digits and higher."

— Sean Conlon

Advancing stocks point to solid market breadth Tuesday

Market breadth appeared solid in early trading Tuesday, a welcome change for investors after narrow leadership over the past few weeks.

Shortly before 10 a.m., advancing stocks on the New York Stock Exchange outpaced declining stocks by a ratio of more than 3-to-1, according to FactSet. On the Nasdaq, the advantage was nearly 2-to-1.

Meanwhile, just five of the 30 stocks in the Dow were negative.

— Jesse Pound

S&P 500 has had 57 record closes this year

Wall Street might not close 2024 exactly at record highs, but there have been plenty of milestones throughout the year.

Through Monday's close, there have been 57 record closes for the S&P in 2024, 47 for the Dow and 38 for the Nasdaq Composite.

The Nasdaq, which has the most exposure to the artificial intelligence trade of the three averages, is now up 86% over the past two years. That is its best two-year stretch since 2019 and 2020.

— Jesse Pound, Gina Francolla

Stocks open higher on final day of the year

Trading started off on a positive note Tuesday, with all three major averages opening in positive territory. The Dow rose 123 points, or 0.3%. The Nasdaq Composite and S&P 500 saw similar gains.

— Jesse Pound

Stocks making moves before the bell

Check out the stocks making moves in the premarket:

• Crypto stocks — Stocks tied to the price of bitcoin gained as the cryptocurrency inched higher on Tuesday. Bitcoin proxy MicroStrategy advanced nearly 5%, while crypto services provider Coinbase rose more than 2%. Miners Mara Holdings and Riot Platforms also each moved more than 2% higher.
• Verisign — The internet stock jumped more than 3% in premarket trading after a regulatory filing revealed Warren Buffett's Berkshire Hathaway bought more shares in the company. The conglomerate added 76,487 more shares of Verisign over the past three trading days for 15.6 million. The firm also purchased the stock in the prior week.
• Sangamo Therapeutics — Shares of Sangamo Therapeutics plunged more than 54% after the company said its partner Pfizer ended their hemophilia A gene therapy co-development agreement, delaying the prospects of bringing the development to market. Sangamo now has the rights to the product and said it will explore options to advance it. Pfizer shares were 0.3% higher, meanwhile.

Read the full list here.

— Sean Conlon

Long-term Treasury yields at 'uncomfortable' levels, Tastytrade's Sosnoff says

A weak December for stocks has coincided with the back end of the Treasury curve climbing. The move in rates, due in part to changing expectations around Federal Reserve rate cuts, could be hurting optimism for stocks.

"The one risk out there is that the 10-year and the 30-year are hovering at levels that make people uncomfortable if they break down from here," Tom Sosnoff, founder and CEO of retail trading platform Tastylive, said on "Squawk Box." Retail investors appear to be long on stocks currently, Sosnoff added.

The 10-year Treasury yield was down slightly on Tuesday to 4.521%. That is up from 4.178% at the end of November.

— Jesse Pound

Berkshire buys more Verisign shares, takes stake to 13.8%

Shares of Verisign climbed more than 3% in premarket trading after a regulatory filing revealed Warren Buffett's Berkshire Hathaway bought more shares in the company.

The conglomerate added 76,487 more shares of Verisign over the past three trading days for $15.6 million, bringing its stake to 13.8%. The firm also purchased the internet stock in the prior week. Given the small size of the bet, these transactions could be made by Buffett's investing lieutenants Todd Combs and Ted Weschler.

Berkshire first bought the tech stock in 2013 and hasn't adjusted the stake in years. Verisign has had a mediocre year with its stock flat in 2024, significantly underperforming the tech sector.

— Yun Li

Dollar enters final day of 2024 up more than 6%

The ICE U.S. Dollar Index enters the final day of December up 6.61% in 2024, which will mark the greenback's third positive year in four. All of those gains have come in the fourth quarter, when the index is up 7.20%, which is on track to be the best quarterly performance since 2015.

The late-year jump for the dollar has come as traders have dialed back their expectations for Federal Reserve rate cuts in 2025 and after President-elect Donald Trump's win in November. In general, higher rates from the Fed and higher tariffs are expected to result in a stronger dollar.

The greenback is also hitting new milestones against some key currency pairs. On Tuesday morning, the dollar was trading at its highest level against the Chinese yuan offshore since Oct. 25, 2022.

— Jesse Pound, Christopher Hayes, Gina Francolla

These are the five best-performing stocks in the S&P 500

The top five S&P 500 stocks of 2024 have more than doubled:

• Palantir Technologies: up 349.5%
• Vistra: up 263.7%
• Nvidia: up 177.6%
• United Airlines: up 138%
• Axon Enterprise: 133.9%

— Fred Imbert

Where the major averages stand heading into the final trading day of 2024

This is where the major averages stand ahead of the final trading session of the year.

Dow Jones Industrial Average:

• Down 5.2% this month for its worst monthly performance since September 2022
• Up 0.6% in the fourth quarter
• Up about 13% this year

S&P 500:

• Dow 2.1% for its worst month since April
• Up 2.5% during the fourth quarter and fifth consecutive winning quarter for the first time since 2021
• Up 23.8% on the year for a consecutive yearly gain of 20% or more

Nasdaq Composite:

• Up 1.4% this month
• Headed for 7.1% fourth-quarter gain and fifth straight winning quarter for the first time since 2021
• Up 29.8% on the year

— Samantha Subin, Chris Hayes

Stock futures are lower ahead of final trading day of 2024

Stock futures edged down slightly as Wall Street prepped for the final trading session of 2024.

Futures tied to the Dow Jones Industrial Average dipped 40 points, while S&P 500 futures ticked down 0.2%. Nasdaq-100 futures lost nearly 0.3%.

— Samantha Subin