Stocks tumbled on Friday, Dec. 1, on a report that Michael Flynn, the former national security adviser to Donald Trump, will testify about the president and Russia's alleged meddling in the 2016 election.
The Dow Jones Industrial Average fell 41 points or 0.17%. At one point Friday, the Dow declined 350 points. The S&P 500 fell 0.21% and the Nasdaq dropped 0.38%.
The energy sector rose on Friday as oil prices in the U.S. jumped 1.7% to $58.36 a barrel. The United States Oil Fund (USO) gained 1.6%.
ABC News reported that Flynn promised "full cooperation to the Mueller team" and is prepared to testify that as a candidate Trump "directed him to make contact with the Russians." Flynn pleaded guilty on Friday to lying to the FBI about a conversation with the Russian ambassador last December.
Markets had fluctuated earlier in the session as Senate Republicans made progress in getting their tax bill over the finish line.
The chances of the bill's passage looked more certain after prominent holdouts Sens. Steve Daines, Ron Johnson, John McCain and most recently Jeff Flake voiced support for the legislation. Senate Majority Leader Mitch McConnell said Friday that Republicans have enough votes to pass the tax bill.
Daines and Johnson became a "yes" after Senate leaders agreed to increase the deduction available for pass-through income. The deduction amount was raised to 23% from 17.4%, according to analysis by The Wall Street Journal.
McCain said he would support the legislation on Thursday. In a statement, McCain said that the bill "though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families." However, a number of economists have criticized the bill's logic -- tax relief for corporations does not necessarily inspire increased reinvestment and higher worker wages. In fact, the New York Times reported that an initiative to deliver corporate tax savings in 2004 was funneled toward share buybacks, instead.
Chief Market Strategist Brett Ewing of First Franklin said he believes "tax reform may have been the carrot that the market has been chasing on its way up, but a sell-the-news event could occur and a pullback could happen when the bill is actually signed."
Ewing added that lowered corporate tax rates will "allow small caps that pay the highest rates to become more competitive with larger companies that pay lower effective rates."
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