The Dow dropped 38.37 points to 12,463.15, but gained 16 percent over the year, its greatest yearly gain in three years.

On the New York Stock Exchange, 1,274 stocks advanced and 2,059 declined on a volume of 1.7 million shares.

The Standard & Poor's 500-stock index, up 14 percent in 2006, slipped 6.45 to 1418.28. The Nasdaq Composite Index, up 9.5 percent this year, slid 10.28 to 2415.29.

Regular trading resumes Wednesday. Most U.S. exchanges will be closed Monday for New Year's Day and Tuesday to observe the death of former U.S. President Gerald Ford.

The 10-year Treasury note fell 3/32, or 94 cents per each $1,000 invested, to yield 4.708 percent. The 30-year note gained 3/32, yielding 4.812 percent.

The euro traded at $1.3197 from $1.3146 Thursday. The dollar was at 119.03 yen from 118.91 yen late Thursday.

In London, the FTSE 100 index closed 0.3 percent lower at 6,220.80.

Japan's benchmark Nikkei 225 stock index closed up 0.01 percent to finish at 17,225.83 -- the Nikkei's highest close since May 9.