S&P 500 is little changed in final trading day of the year, set for 27% gain in 2021

U.S. stocks were little changed Friday morning as investors close out a stellar 2021.

The Dow Jones Industrial Average shed about 30 points. The S&P 500 traded near the flatline. The Nasdaq Composite was marginally lower.

Pfizer led the S&P 500, rising 1.9%. British regulators approved the use of Paxlovid – the drug maker's Covid-19 antiviral pill – for people over 18 with mild to moderate illness.

Advanced Micro Devices was also a top gainer in the benchmark index. The stock gained more than 1% after the chip maker said it expects $35 billion all-stock takeover deal for rival Xilinx to be completed during the first quarter of 2022.

The major averages are all up double-digits this year as the global economy began its recovery from the 2020 Covid lockdowns, while the Federal Reserve maintained supportive measures first implemented at the onset of the pandemic.

"2021 was another exceptional year for U.S. equity markets," Wells Fargo Investment Institute's Chris Haverland said in a note. "The markets were supported by encouraging news on the pandemic and highly accommodative fiscal and monetary policies."

Strong corporate earnings also boosted U.S. stocks, Haverland said. The estimated year-over-year earnings growth rate for 2021 is 45.1%, according to FactSet. That would mark the highest annual earnings growth rate for the index since FactSet began tracking the metric in 2008.

"The economic and earnings rebound that started in 2020 carried over into 2021, lifting equity markets to record highs. While returns in 2020 were driven by price-to-earnings multiple expansion, returns in 2021 were driven by earnings growth," Haverland said.

Entering Friday's session, the S&P 500 was up 27.2% year to date. That puts the market benchmark on track for its third straight annual gain. Energy and real estate have been the best-performing sectors in the S&P 500 this year, surging more than 40% each. Tech and financials are also up more than 30%.

The 30-stock Dow was up 18.9% through Thursday's close, also putting it on pace for its third consecutive yearly gain. Home Depot and Microsoft have led the Dow gains, rising more than 50% each.

The tech-focused Nasdaq has risen 22.1% this year, putting the composite on track for its ninth annual gain in 10 years. Names like Alphabet, Apple, Meta Platforms and Tesla have led Nasdaq's gains this year.

Many investors and strategists expect tougher conditions next year as the Fed tapers off its pandemic-era easy monetary policy and addresses persistent inflation.

"It's going to be tougher, I think, in the second half of 2022. Still, I think you're going to have enough market for stocks next year," Wharton finance professor and long-time market bull Jeremy Siegel said Friday on CNBC's "Squawk Box."

—CNBC's Fred Imbert contributed to this report.