Stocks tumble, gold spikes on report that Flynn is prepared to testify against Trump

Stocks fell sharply on Friday on an ABC News report that Michael Flynn would say President Donald Trump told him to contact Russians.
Earlier Friday, Flynn was charged with one count of making false statements to federal investigators. He has pleaded guilty.
Stocks rose to new highs this week as Senate Republicans advanced their tax bill, though news related to the Russia investigation has now overshadowed that in markets.

US stocks fell in trading on Friday following an ABC News report that said Michael Flynn, the former national security adviser, would testify that President Donald Trump told him to contact Russians.

The report, from ABC's Brian Ross, was not confirmed by other media outlets. ABC later clarified that Flynn would testify that Trump as president-elect directed him to make contact with Russians — not as a candidate.

Flynn was charged earlier Friday with one count of making false statements to federal investigators. He has pleaded guilty and promised to cooperate with the special counsel Robert Mueller, who is leading an investigation into Russia's interference in the 2016 US election and whether members of Trump's campaign colluded with Russians.

Ty Cobb, a White House lawyer, said in a statement that Flynn's guilty plea did not implicate anyone other than Flynn.

Stocks had opened lower on Friday amid concerns about the Republican tax bill and its potential effect on the federal budget deficit.

The market gained this week as Senate Republicans moved closer toward passing the bill — the chamber is expected to vote on it on Friday. But new details about the Russia investigation, which has dogged Trump's presidency over the past year, have overshadowed that progress and interrupted the rally for now.

The Dow, off its worst levels of the intraday sell-off, was down 90 points, or 0.37%, to 24,182, at 1:31 p.m. ET. The S&P 500 was down 0.43%, to 2,636.

"Ultimately, the market will look past the politics and focus on the positive economic fundamentals and benefits of tax reform, and this is what will lead markets higher after they've been knocked down in the short run," said Chris Zaccarelli, the chief investment officer at Independent Advisor Alliance.

Other markets also reacted to the news. Treasurys rallied, sending the benchmark 10-year yield down by 9 basis points, to 2.322%. It was the biggest drop in the safe haven's yield in over six months, according to Bloomberg.

Gold jumped 1.1%, or $15.20 an ounce, to $1,288.40.