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Higher Treasury yields pressure stocks

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S&P 500 set for biggest two-year jump since 1997-98

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Indexes off: Dow 0.15%, S&P 500 0.22%, Nasdaq 0.33%

(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window)

By Johann M Cherian and Pranav Kashyap

Dec 31 (Reuters) - Wall Street's main indexes slipped in

the last trading session of 2024 as Treasury yields rose, but

the benchmark S&P 500 remained on course to notch its biggest

two-year rally in more than two decades.

The index has surged more than 50% in the past two years and

is trading near record highs, while the Dow and the Nasdaq are

also set for their second consecutive year in gains.

A nearly 100-basis point cut in interest rates in 2024 by

the Federal Reserve and a rally in technology stocks in

anticipation of boost to corporate profits from artificial

intelligence have catapulted equities to record highs in 2024.

The tech, communications services and

consumer discretionary stocks have advanced more than

30% this year.

Although AI poster-child Nvidia's ( NVDA ) more than 170%

surge this year was smaller compared with last year, the rally

helped the company notch $3 trillion in market value, while

Tesla reclaimed $1 trillion level.

Tech stocks, however, led sectoral declines on Tuesday,

while energy stocks added more than 1%, tracking higher

crude prices.

At 11:58 a.m., the Dow Jones Industrial Average fell

62.96 points, or 0.15%, to 42,510.29, the S&P 500 lost

13.16 points, or 0.22%, to 5,893.78 and the Nasdaq Composite

lost 63.85 points, or 0.33%, to 19,422.94.

Nvidia ( NVDA ) was down 1.2%, while the Elon Musk-led automaker

slipped 0.3%. Moves are expected to be influenced by thin

volumes ahead of New Year's holiday on Wednesday.

Toward the end of the year, risk-taking improved as Donald

Trump's presidential win boosted bets that he would deliver on

his promises to ease regulations, cut taxes and raise tariffs to

help domestic businesses.

His win also powered small-cap stocks. The Russell 2000

clinched a record high and was set for a second straight

year of gains with a 10% increase. Bank shares are up

about 34% this year.

However, equities hit a rough patch in December, putting the

S&P 500 on course for its biggest monthly decline since April as

Treasury yields rose at a time when equity valuations are

stretched and the Fed is concerned about likely inflationary

pressures from Trump's policies.

Traders expect the first rate cut of 2025 in either March or

May.

"Market will experience greater volatility in 2025 as I

believe the market is pricey. We could see additional profit

taking in 2025," said Sam Stovall, chief investment strategist

with CFRA Research.

"Investors will end up with another positive year at the

end, but it'll be a pretty bumpy ride."

Meanwhile, Trump's win has invigorated crypto stocks, with

Bitcoin hitting $100,000.

MicroStrategy ( MSTR ) shares have jumped over 300% this

year as it continues buying and holding bitcoin. The stock

dropped 1.9% on Tuesday, while Coinbase and MARA

Holdings ( MARA ) lost 1.3% and 1%, respectively.

Other areas of the market, however, have witnessed annual

declines, with materials stocks down about 2%, hurt by

the economic woes in top metals consumer China.

Advancing issues outnumbered decliners by a 1.75-to-1 ratio

on the NYSE and by a 1.04-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and no new lows

while the Nasdaq Composite recorded 35 new highs and 42 new

lows.