By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica
Dow on track for its best annual performance in three years
U.S. stocks were slightly lower in the final trading day of the year on Friday, as investors took profits from some of 2016's most highflying sectors, although major indexes remained on track to post strong annual gains, including the Dow's best calendar-year performance since 2013.
Trading on the day was quiet, with most sectors barely moving, as is typical for the final trading week of the year, which is historically marked by low volume. Markets will be closed for the New Year's Day holiday (http://www.marketwatch.com/story/when-do-us-markets-close-for-new-years-day-2016-12-29) on Monday.
"Most trading desks are in a holding pattern until the next year. Right now 60% of people are off the desk, the phones aren't ringing, and there's nothing driving the market that needs urgent attention," said Michael Matousek, head trader at U.S. Global Investors.
Read: These ETFs could make your 2017 a happy new year (http://www.marketwatch.com/story/these-etfs-could-make-your-2017-a-happy-new-year-2016-12-30)
Markets have been in a particular uptrend since last month's presidential election, which sparked a rally that has contributed the bulk of the year's gains. Investors are betting that President-elect Donald Trump will push for policies--including massive corporate tax cuts and deregulation--that will accelerate economic growth.
The Dow Jones Industrial Average dipped 5 points to 19,813 while the S&P 500 lost 1.4 point to 2,248. Both indexes were down less than 0.1% on the day. The Nasdaq Composite Index fell 5.2 points to 5,427, a drop of 0.1%.
The weakest sectors of the day were utilities and telecommunications, both of which lost 0.2%. Both have been strong performers throughout 2016, in large part due to investors seeking out their higher dividends in a time when bond were yielding little.
"There are some short-term players who are taking some profits," Matousek said.
Need to know:This is why stocks look set to fall as 2017 arrives (http://www.marketwatch.com/story/this-is-why-stocks-look-set-to-fall-as-2017-arrives-2016-12-30)
With one session left to go, the Dow is set finish the year 13.7% higher, which would mark the biggest percentage gain since 2013. For the week, the index is set to finish 0.6% lower. The S&P 500 is looking at a yearly gain of around 10%, the best since 2014. The Nasdaq Composite is looking at a gain of 8.5%.
All three indexes have hit repeated records in the year, while the Dow hasrepeatedly come within 0.1% of the milestone level of 20,000, although it failed to penetrate it.
Read:Impressed by the Dow? This stock market has performed just as well in 2016 (http://www.marketwatch.com/story/impressed-by-the-dow-this-stock-market-has-performed-just-as-well-in-2016-2016-12-29)
"Barring a miracle, Dow 20,000 looks off the cards, although the rebound in the index over the past year, as in other U.S. markets, has been astounding," said Chris Beauchamp, chief market analyst at IG.
See:What Dow 20,000 means for stock-market investors (http://www.marketwatch.com/story/what-dow-20000-means-for-stock-market-investors-2016-12-14)
(http://www.marketwatch.com/story/what-dow-20000-means-for-stock-market-investors-2016-12-14)Also read:All of the important Dow milestones in one chart (http://www.marketwatch.com/story/all-of-the-important-dow-milestones-in-one-chart-2016-12-28)
"Only time will tell if the Trump euphoria can be sustained, or whether we are due another correction early on in the New Year," said Beauchamp in a note to clients.
In the latest economic data, the December Chicago purchasing managers index fell 3 points to 54.6.
Shares of Innocoll Holdings PLC(INNL) plummeted 63% after the U.S. Food and Drug Administration said it was seeking further data on the company's treatment for postsurgical pain.
Read:The SEC's fraud-busting investing tips for 2017 (http://www.marketwatch.com/story/the-secs-fraud-busting-investing-tips-for-2017-2016-12-29)
Other markets: European stocks were set for their first yearly slide since 2011, while Asian markets ended the year slightly higher.
The dollar index (http://www.marketwatch.com/story/dollar-weakens-against-yen-taking-a-hit-on-weak-us-home-sales-2016-12-29), which tracks the currency against a basket of six major rivals, fell 0.4%.
The Russian ruble fell sharply against the U.S. dollar as diplomatic tensions intensified (http://www.marketwatch.com/story/ruble-slides-after-diplomatic-spat-between-us-and-russia-2016-12-30) between the U.S. and Russia in the wake of sanctions against the latter over alleged U.S. election hacking. However, Russian President Vladimir Putin on Friday said Russia wouldn't expel U.S. diplomats (http://www.marketwatch.com/story/putin-says-russia-wont-expel-any-us-diplomats-2016-12-30) in retaliation for Washington's expulsion of 35 alleged Russian intelligence operatives.
Oil prices edged lower but were set to post the first calendar-year gain since 2013 (http://www.marketwatch.com/story/oil-prices-higher-after-us-supply-data-shows-weak-rise-in-stockpiles-2016-12-30), while gold was moderately higher (http://www.marketwatch.com/story/gold-gains-will-snap-worst-weekly-skid-in-12-years-2016-12-30).
(END) Dow Jones Newswires
December 30, 2016 10:11 ET (15:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.