Stocks closed lower in the final trading day of a heavily volatile year. The Dow finished higher for the year, while the S&P erased its gains to close out largely flat.
The Dow Jones Industrial Average finished lower for the session, but finished in the black for 2011 and posted its its biggest quarterly point gain in history.
Within the blue-chip index, McDonald's was the top gainer for 2011, surging more than 30 percent, while BofA posted the biggest loss, plunging almost 55 percent.
The S&P 500 and the Nasdaq also ended the session lower. The S&P erased its earlier gains for the year in the final minutes of trading, leaving the index largely unchanged for the year.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 23.
Utilities and consumer staples were the top sector performers in 2011, all climbing more than 10 percent. Meanwhile, financials and materials were the biggest losers.
Volume was extremely light for most of the shortened trading week as many investors remained on the sidelines until the New Year to start making large bets.
Traders say Europe will continue to be the focus of investors' attention in 2012, with elections in the U.S. possibly changing the political landscape.
“The uncertainty is going to stay next year and people are going to remain nervous,” said Alan Valdes, director of floor operations at DME Securities. “You’re going to get some resolution to this uncertainty, but right now, you’re going to see markets go back and forth mainly because of Europe.”
European stocks closed the session higherbut logged sharp declines for the year, hammered by the region's debt crisis. The German DAX plunged almost 15 percent, while the French CAC tumbled nearly 20 percent.
The SEC got a fresh dressing-down from the judge who rejected its $285 million settlement with Citigroup
Meanwhile, Verizon scrapped its proposal to charge customersan extra fee for some payment types, citing “customer feedback.”
Google edged slightly higher after Baird raised its price target on the search-engine giant to $760 from $700.
Standard & Poor's placed Sears' credit rating on review for a possible downgrade, saying the retailer's plan to close at least 100 stores may not do much to improve its performance.
AMR plunged sharply after the NYSE said it will delist the American Airlines parent company's common stock before the opening bell on January 5 following the firm's bankruptcy filing last month.
—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC—
Coming Up Next Week:
MONDAY: New Year's Day observed—All markets closed
TUESDAY: ISM mfg index, construction spending, FOMC minutes
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, factory orders, auto sales; Earnings from Mosaic
THURSDAY: ADP employment report, jobless claims, ISM non-mfg index, oil inventories, chain-store sales; Earnings from Monsanto
FRIDAY: Non-farm payrolls
More From CNBC.com: