Wall Street fails to recover early losses, ends first day of December lower

• Concerns over Russia probe moving towards Trump hurt the market sentiment.
• CBOE Volatility Index surged to its highest level in nearly 3-months.
• Crude oil rally helped energy shares close day higher. 

After starting the day lower, major equity indexes in the U.S. turned positive on the back of upbeat macroeconomic data but failed to extend their gains as recent developments surrounding the investigation of Russia being involved in the 2016 presidential election hurt the market sentiment. 

On Friday, Michael Flynn, Trump's ex-national security adviser, pleaded guilty and turned himself into authorities for a plea hearing in Washington. Reports from several news outlets claimed that Flynn promised his full cooperation and was going to testify against President Trump by explaining that he was the one who directed him to make contacts with Russians during his candidacy. The CBOE Volatility Index (VIC), Wall Street's fear gauge, jumped to its highest level since August and closed the day 4% higher. 

The risk-sensitive S&P 500 Information Technology Sector (SPLRCT) dropped 0.55% on the day. Moreover, the S&P 500 Financials Sector (SPSY) also dropped sharply as investors booked profits after this development. However, with more Republicans announcing their support for the tax bill, the index staged a late recovery and finished the day slightly higher.

“We have to point to something that is new, and that would be the Flynn announcement. The problem is we don’t know exactly what he’s going to say. That’s the unknown and the market doesn’t like to try to price unknowns. We have an information vacuum,” Art Hogan, chief market strategist with Wunderlich Securities in New York, told Reuters.

On the other hand, after OPEC's decision to extend the output cut deal for nine more months until the end of 2018, crude oil rose sharply on Friday, boosting the S&P 500 Energy Sector (SPNY), which added 0.8% on the day.

According to the latest available data on Reuters, the Dow Jones Industrial Average fell 43 points, or 0.18%, to close the week at 24,221.04, the S&P 500 lost 5.25 points, or 0.2%, to 2,643.00 and the Nasdaq Composite dropped 26.39 points, or 0.38%, to 6,847.59.