The S&P 500 and the Nasdaq closed fractionally lower in choppy trading on Tuesday, as gains in communication services stocks were offset by declines in technology and financial stocks, with financials also weighing on the Dow.

Communication services shares were among the biggest gainers on the S&P 500, fueled by a 1.1 percent rise in Meta Platforms. The technology company said it would acquire Chinese-founded artificial intelligence startup Manus, accelerating efforts to integrate advanced AI across its platforms such as Facebook and Instagram.

Information technology stocks ended slightly lower with Apple down 0.3 percent and Nvidia falling 0.4 percent, while Microsoft inched up.

"The growth rates are going to converge between technology and everything else next year and the valuation ⁠gap is so wide, it absolutely is justified to see repositioning," said Mark Hackett, chief market strategist at Nationwide.

"It's just a healthy rebalancing of allocations more so than an emotionally driven sell-off (in tech)."

Trading volumes remained thin in the holiday-truncated week, which analysts expect could heighten market volatility.

Losses in Goldman Sachs and American Express weighed on the Dow. Citigroup fell 0.8 percent a day after it announced its board approved the sale of its Russian unit, AO Citibank, to Renaissance Capital.

The deal will lead to a pre-tax loss of about US$1.2 billion, largely related to currency translation.

"We believe investors will look past it as a non-core item and focus more on the idea that resolution of another legacy issue is getting closer to the finish line – a positive for (Citi's) ongoing transformation," said R. Scott Siefers, analyst at Piper Sandler in a note.

The S&P 500 lost 0.1 percent to close at 6,896 points, the Nasdaq Composite lost 0.2 percent to 23,419, and the Dow Jones Industrial Average fell 0.2 percent to 48,367.

The S&P 500 and the Dow are set for their eighth consecutive month of gains, their longest monthly winning streak since 2017.

Some investors eye a "Santa Claus rally", in which the S&P 500 typically posts gains over the last five trading days of the year and the first two of January, according to the ⁠Stock Trader's Almanac. (Reuters)