U.S. stocks closed lower in light volume trade on Wednesday, with the major indices erasing gains for December and the Dow below the benchmark 18,000 level.
However, blue chips posted a 7.52 percent gain for 2014, with the S&P 500 and Nasdaq up more than 11 percent for the year.
"I don't see any real reason for the decline except last-minute selling and low volume," said Peter Cardillo, chief market economist at Rockwell Global Capital. He called the extended decline a "technical weakness."
Decliners were a step ahead of advancers on the New York Stock Exchange, with an exchange volume of 487 million and a composite volume of 2.4 billion in the close.
The Dow Jones Industrial Average closed down 160 points, or 0.89 percent, at 17,823.07, for a gain of 7.52 percent for the year, the sixth straight year of gains for the blue chip index. Intel led gains for the year, while IBM was the greatest laggard.
Joe Bell, senior equity analyst at Schaeffer's Investment Research, did not see any direct reason for the gains on Home Depot, which is the third best performing blue-chip for the year.
"We're not seeing a ton of price action today with the holiday," he said. "A lot of people are out of the office."
The had its worst final trading day of the year since 2001, closing down 21.4 points, or 1.03 percent, at 2,058.90, posting a gain of 11.39 percent for the year in its third consecutive annual return. In 2014, Southwest Airlines was the best performer on the S&P, while the worst was Transocean.
Utilities led declines for the second-straight day, with all sectors falling.
Utilities have gained 24.28 percent for the year as the best performing sector—but the worst this week. 2014's top utility stocks included Integrys Energy, Edison International, Entergy, and Pepco Holdings.
The Nasdaq closed down 41.3 points, or 0.87 percent, at 4,736.05, pressured by a nearly 2 percent decline in Apple. The stock is on track to post its first yearly decline in iPad sales since the device was introduced, according to a report from market research firm ABI Research. But the report also said Apple should reverse that trend in 2015, with overall tablet sales rising 16 percent.
The index posted gains of 13.40 percent for the year.
"Last day of the year, things get exaggerated," said Peter Boockvar, chief market analyst at The Lindsey Group. He said there were no major news events that caused stocks to reverse from morning gains.
The Chicago Purchasing Managers' Index for December came out at 58.3, below expectations.
"I don't think it's a big deal. I think the last day of trading today is on a lot of noise," Boockvar said.
Pending home sales rose just 0.8 percent in November from a downwardly revised October reading.
Futures pared gains slightly but remained in the green after the weekly initial jobless claims numbers came in a bit higher than expected at 298,000.
"I think the market indices are likely to close in the green and close the year in strong gains," Cardillo said in the morning. He noted that light trading volume would likely cause "insignificant" but "larger-than-usual gyrations."
European stocks finished higher in a half-day session, posting an average of 4 percent gains for the year.
In Asia, meanwhile, shares were mixed amid thin volumes, with Japan, South Korea, Indonesia, Thailand and the Philippines shut for public holidays.
After wavering between gains and losses following the release of December's manufacturing data, China's Shanghai Composite index regained momentum to climb 2.2 percent on Wednesday and raking in 53 percent year-to-date to be the second best performer globally in 2014. Argentina was the top performer with 59 percent gains.
Of the markets CNBC tracks, Russia was the worst global performer with a 45 percent decline in 2014, followed by Greece's nearly 29 percent decline for the year.
Markets will be closed on Thursday for New Year's Day.
Oil prices will continue to be in focus, with the rout deepening on Wednesday. Benchmark Brent crude fell to a 5-1/2-year low below $57 a barrel.
Crude oil futures for February settled down 85 cents, at $53.27 a barrel on the New York Mercantile Exchange, down 46 percent for the year and the lowest level since May 2009. Gold futures settled at $1,184.10, below Tuesday's settlement of $1,200.40 and down 1.5 percent for the year.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, spiked as much as 21 percent to trade above 19. The VIX ended the year up nearly 40 percent.
The Russell 2000 touched an intraday high before declining but ended the year up 3.53 percent.
Stocks in focus included BP, after the U.K.'s Financial Times reported the supermajor was investigating financial traders in its oil and gas group for foreign exchange manipulation.
Drug store chain operator Walgreen Co. completed its merger with Britain's Alliance Boots, with the combined company trading under the WBA ticker and the name Walgreens Boots Alliance. Greg Wasson, who had served as Walgreen CEO, is retiring, with Stefano Pessina becoming acting CEO.
On tap this week:
Markets closed for New Year's Day
10 a.m.: ISM Mfg Index
10: a.m. Construction spending