By Stephen Culp

NEW YORK (Reuters) – Wall Street lost ground on Tuesday as investors closed the book on a remarkable year for equities, in which the U.S. stock market was powered to record highs by twin engines. the artificial-intelligence boom and the US Federal Reserve. first interest rate cut in three and a half years.

The three major US stock indexes closed in negative territory, ending a slow, low-volume session in contrast to the turbulent year that preceded it.

2024 includes intensifying geopolitical strife, a US presidential election and shifting speculation about the Fed’s policy path in the coming year.

“There is no Santa Claus rally this week, but investors have received the gift of gains in 2024,” said Greg Bassuk, chief executive officer of AXS Investments in New York. “2024 is a big year for equity gains driven by a trifecta of AI explosion, a slew of Fed interest rate cuts and a strong US economy.”

“This sets the stage for continued momentum towards 2025,” added Bassuk.

For 2024, the Nasdaq rose 28.6%, while the bellwether gained 23.3%, marking the index’s best two-year run since 1997-1998.

The blue-chip Dow posted a 12.9% advance for the year.

Among the 11 major sectors of the S&P 500, communications services, technology and consumer discretionary were 2024’s biggest percentage gainers, jumping between 29.1% and 38.9% over the year.

Healthcare, real estate and energy were the only sectors that registered a single-digit gain, while the materials sector was the only 2024 decliner, falling almost 1.8%.

For the fourth quarter, the Nasdaq jumped 6.2%, while the S&P 500 advanced 2.1%. The Dow took a 0.5% gain for the October-December period.

Tuesday fell 29.51 points, or 0.07%, to 42,544.22, the S&P 500 lost 25.31 points, or 0.43%, to 5,881.63 and lost 175.99 points, or 0.90%, to 19,310.

Looking ahead to 2025, financial markets are now pricing in around 50 basis points of further interest rate cuts from the Fed, with investors eyeing high valuations and volatility. uncertainty surrounding tax and tariff policies from the administration of President-elect Donald Trump.

“Investors should be cautious about the impact of the incoming Trump administration and how it will affect certain sectors,” said Bassuk, adding that “the instability is driven by geopolitics, especially the war in Russia / Ukraine and continued conflict in the Middle East may cause shock” to companies and sectors that have relations with the affected regions.

Bassuk believes the AI ​​boom still has room to grow.

“Estimations have been high amid the stock’s rise, but that’s because we believe AI development is set to continue and move beyond hardware to software in many ways across most sectors,” he added.

Advances in issues are outnumbered by a 1.3-to-1 ratio on the NYSE. There were 52 new highs and 125 new lows on the NYSE.

On the Nasdaq, 2,013 stocks rose and 2,336 fell while declining issues outnumbered advancing ones by a 1.16-to-1 ratio.

The S&P 500 posted 2 new 52-week highs and one new low while the Nasdaq Composite recorded 43 new highs and 71 new lows.

The volume of US exchanges was 14.59 billion shares, compared to the 14.81 billion average for the entire session in the last 20 trading days.