Financial markets turned defensive Friday, with stocks sliding and Treasuries advancing with gold after Michael Flynn pleaded guilty to lying to federal agents. Equities rebounded from the worst of the losses as Senate Republicans edged closer to passing tax cuts. The S&P 500 index fell as much as 1.5 percent on news that special counsel Robert Mueller’s investigation had pierced the White House inner circle. Equities clawed back more than half the plunge after the Senate said it had the votes to slash corporate taxes, finishing the day lower by 0.2 percent and notching the best weekly advance since early September. Haven assets surged after the former national security adviser agreed to provide cooperation, with the heaviest selling in equity coming after ABC News reported that Flynn would testify that Trump directed him to make contact with the Russians. Markets rallied last week, propelling the Dow Jones Industrial Average past 24,000, on speculation tax cuts will supercharge already strong economic growth. That narrative that took over in afternoon trading as stocks marched steadily higher to nearly erase the drop. ‘‘For the first time in a long time, the political risks are starting to seep into the capital markets,’’ Chris Harvey, head of equity strategy at Wells Fargo & Co. ‘‘There is some real possibility that Trump has some issues and the market is pricing in those issues today. That also seeps into taxes.’’ The European Commission College of Commissioners will discuss Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship. US employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department’s jobs report on Friday may also show a bump up in average hourly earnings.