S&P 500 is little changed in final trading day of the year, set for 27% gain in 2021

U.S. stocks were marginally lower Friday morning as investors close out a stellar 2021.

The Dow Jones Industrial Average shed about 20 points. The S&P 500 was little changed. The Nasdaq Composite dipped 0.1%.

Pfizer was a top gainer the S&P 500 on Friday, rising 1.8%. British regulators approved the use of Paxlovid – the drugmaker’s Covid-19 antiviral pill – for people over 18 with mild to moderate illness.

Ford Motor was also among the leaders in the S&P 500 on Friday, adding 1.9%, bringing its year-to-date return to more than 137%. The auto stock is one of the top performers in the benchmark index for the year.

The major averages are all up double-digits this year as the global economy began its recovery from the 2020 Covid lockdowns, while the Federal Reserve maintained supportive measures first implemented at the onset of the pandemic.

The S&P 500 is up 27.1% in 2021, putting the benchmark on pace for its third straight positive year. The Dow and Nasdaq are also headed for a three-year winning streak, having gained 18.8% and 21.9% for the year, respectively.

“2021 was another exceptional year for U.S. equity markets,” Wells Fargo Investment Institute’s Chris Haverland said in a note. “The markets were supported by … highly accommodative fiscal and monetary policies.”

Strong corporate earnings also boosted U.S. stocks, Haverland said. The estimated year-over-year earnings growth rate for 2021 is 45.1%, according to FactSet. That would mark the highest annual earnings growth rate for the index since FactSet began tracking the metric in 2008.

“The economic and earnings rebound that started in 2020 carried over into 2021, lifting equity markets to record highs. While returns in 2020 were driven by price-to-earnings multiple expansion, returns in 2021 were driven by earnings growth,” Haverland said.

Energy and real estate have been the best-performing sectors in the S&P 500 this year, surging more than 40% each. Tech and financials are also up more than 30%. Home Depot and Microsoft have led the Dow gains, rising more than 50% each. Names like Alphabet, Apple, Meta Platforms and Tesla have led Nasdaq’s gains this year.

The gains come even as the Covid pandemic rages on, with variants like delta and, more recently, omicron leading to case outbreaks throughout the year. The U.S. has now recorded more than 53 million Covid cases and more than 820,000 deaths, according to CDC data as of Thursday.

To be sure, developments like the rollout of the Covid vaccine have shifted public health protocols, giving way to some positive sentiment in the market.

But many investors and strategists expect tougher conditions next year as the Fed tapers off its pandemic-era easy monetary policy and addresses persistent inflation.

“It’s going to be tougher, I think, in the second half of 2022. Still, I think you’re going to have enough market for stocks next year,” Wharton finance professor and long-time market bull Jeremy Siegel said Friday on CNBC’s “Squawk Box.”

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—CNBC’s Fred Imbert contributed to this report.

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