MARKET SNAPSHOT: Stocks Fall After Flynn Agrees To Cooperate In Russia Probe, But Dow Set For Strong Weekly Gain
Dow remains on track for best week in nearly a year
U.S. stocks fell on Friday, erasing an early gain after former national security adviser Michael Flynn pleaded guilty to lying to the Federal Bureau of Investigation (http://www.marketwatch.com/story/former-trump-national-security-adviser-michael-flynn-pleads-guilty-to-lying-to-fbi-2017-12-01) and has promised full cooperation with the special counsel's Russia investigation, adding a new element of political uncertainty into markets.
Major indexes were off their lows of the session, however, as optimism continued to build around the prospects that Senate tax legislation will win passage. Both the Dow and the S&P 500 are poised for strong weekly gains, while the Nasdaq is set to end the week lower after a big selloff among its largest technology components.
Where are stocks trading?
The Dow Jones Industrial Average fell 80 points, or 0.3%, to 24,194. The day's trading was volatile, and in the immediate aftermath of the Flynn news the blue-chip average fell about 300 points, though it subsequently recovered much of that ground and it is within 1 percentage point of record levels. The Dow is on track to snap a five-day streak of gains.
The S&P 500 fell 10 points, or 0.4%, to 2,630. The benchmark index was also off its lows of the session. The Nasdaq Composite Index declined 40 points, or 0.6%, to 6,834.
Read: Where to stash your money when this bull market makes you sweat (http://www.marketwatch.com/story/where-to-stash-your-money-when-this-bull-market-makes-you-sweat-2017-11-30)
For the week, the Dow is up 2.7% in its biggest one-week percentage move since last December. The S&P 500 is up 1.4% for the week, on track for its biggest weekly gain since the week ending Sept. 15. Both the Dow and the S&P have has risen in 10 of the past 12 weeks.
The Nasdaq is looking at a weekly decline of 0.8%, the biggest weekly decline for the index since Sept. 8.
The Nasdaq index on Wednesday suffered its biggest drop in more than three months, as highflying tech stocks slumped amid portfolio rebalancing among traders.
What's driving the market?
Investors reacted to the news that the former national-security adviser Michael Flynn pleaded guilty Friday to lying to the FBI, becoming the second member of President Trump's campaign to reach a deal with the special counsel investigating Russia's alleged interference in the U.S. election.
ABC News (http://abcnews.go.com/Politics/michael-flynn-charged-making-false-statements-fbi-documents/story?id=50849354) reported that Flynn had promised "full cooperation" in the special counsel's investigation and is prepared to testify that Trump directed him to make contact with the Russians, initially as a way to work together to fight ISIS in Syria.
Some analysts suggested that this news would delay the vote in the Senate to pass the tax cut bill aimed at lowering corporate tax rates. The final vote on the bill was expected late Thursday but was pushed to Friday because a number of issues still remained unresolved (http://blogs.marketwatch.com/capitolreport/2017/11/30/republican-tax-plan-heads-for-senate-vote-live-updates/).
Read:Here's what's next for the Senate's tax bill (http://www.marketwatch.com/story/heres-whats-next-for-the-senates-tax-bill-2017-11-30)
Among key concerns is how to finance the tax cuts. On Thursday, the Joint Committee on Taxation said the Senate bill would generate more than $400 billion in revenue over 10 years through economic growth, but that's not nearly enough to compensate for the measure's $1.4 trillion cost.
What are strategists saying?
"Mike Flynn testifying against the president was one thing that the market was not pricing in whatsoever, so it's not surprising to see such a sharp knee-jerk reaction," Mike Antonelli, equity sales trader at Robert W. Baird & Co.
"What this also shows is how everyone in the market was positioned long--nobody was short. And news like this can be seen as derailing the tax cuts bill, which is what most investors want," Antonelli said.
The decline comes at a time when stocks have hit dozens of records over the course of the year, with little in the way of volatility or even minor pullbacks. Following November, the S&P 500 has risen for 13 straight months on a total-return basis, the longest such streak in its history (http://www.marketwatch.com/story/with-november-in-the-books-the-sp-500-put-another-chapter-in-its-historic-march-higher-2017-11-30).
"Although today's Washington drama could cause some near-term volatility, the overall economy is on very firm footing and we don't expect this to lead to a major dip," said Ryan Detrick, senior market strategist at LPL Financial. "At the same time, a record 13 months in a row of gains for the S&P 500 (when including dividends) and the longest streak ever without a 3% correction (http://www.marketwatch.com/story/sp-500-is-poised-to-make-uncanny-stock-market-historyfor-doing-almost-nothing-2017-10-12) makes the odds of a normal pullback quite high."
What's on the economic docket?
The Markit manufacturing purchasing managers index for November fell to 53.9 from 54.6 in October. The ISM manufacturing reading (http://www.marketwatch.com/story/us-manufacturers-roar-ahead-ism-shows-2017-12-01)dipped to 58.2% in November from 58.7% in October.
What stocks are moving?
The day's losses were broad, with seven of the 11 primary S&P 500 sectors lower on the day. Industrial stocks were the biggest decliners, off 1.1%, while technology shares fell 0.8%.
Energy traded to the upside, rising 0.8%. Among energy's notable outperformers, Halliburton Co(HAL) rose 3%, while Schlumberger NV(SLB) rose 2.2%. The sector was supported by a 1.4% rise in the price of crude oil.
Mylan NV(MYL) shares jumped 4.9% after a CNBC report on Thursday that Amazon.com Inc. (AMZN) was holding preliminary talks with generic drugmakers (http://www.marketwatch.com/story/amazon-has-discussed-pharmacy-business-with-generic-drugmakers-report-2017-11-30)--including Mylan and Novartis AG(NOVN.EB) (NOVN.EB) unit Sandoz--as it contemplates entering the pharmacy business.
Some heavily-weighted tech stocks continued to weaken. Shares of Apple Inc. (AAPL) fell 1.2%, while NVIDIA Corp. (NVDA) slid 1.8%. Separately, consumer discretionary giant Amazon.com Inc.(AMZN) dropped 1.2%.
Shares of General Motors Co. (GM) fell 0.7% after the car maker reported monthly sales in the U.S. fell by 2.9%, with declines in all brands. Ford Motor (F) rose 0.5%.
Shares of Blue Apron Holdings Inc.(APRN) climbed 8.4% after the struggling meal-kit maker late Thursday installed Chief Financial Officer Brad Dickerson as chief executive (http://www.marketwatch.com/story/blue-apron-installs-new-ceo-as-post-ipo-doldrums-continue-2017-11-30), pushing out co-founder Matthew Salzberg.
Read:'It made us look bad': Pharma CEOs clash over Allergan patent move (http://www.marketwatch.com/story/it-made-us-look-bad-pharma-ceos-clash-over-allergan-patent-move-2017-11-30)
What are other markets doing?
Asian markets closed mixed (http://www.marketwatch.com/story/asian-markets-reverse-course-give-up-early-gains-2017-11-30), while European stocks declined.
Oil prices advanced (http://www.marketwatch.com/story/oil-prices-build-on-gains-after-opec-agreement-to-extend-production-curbs-2017-12-01), building on gains seen after major oil producers, as expected, on Thursday hammered out an agreement to extend ongoing production curbs through 2018. Crude for January traded 2% higher at $58.64 a barrel.
Gold prices rose sharply, trading 1% higher at $1,288.50 an ounce. The ICE Dollar index dropped after Flynn news, trading 0.4% lower at 92.696. The yield on the 10-year Treasury note fell 7 basis points to 2.34%.
(END) Dow Jones Newswires
December 01, 2017 14:55 ET (19:55 GMT)