NEW YORK -- The stock market was not exactly surprised that the so-called supercommittee failed to reach a deal to cut the deficit.
But since summer, investors have sold at the first hint of trouble. So on Monday, they sold big.
The Dow Jones industrial average lost almost 250 points after the special committee of Congress assigned to come up with $1.2 trillion in deficit cuts over 10 years indicated there would be no deal.
"They're essentially giving up," said Robert Robis, head of fixed income macro strategies at ING Investment Management.
The supercommittee stalemate is supposed to trigger automatic spending cuts across the government, but there were already hints that Congress would find a way around them. Analysts say that could lead to another downgrade of the U.S. credit rating.
In addition, the failure raises the question of how a gridlocked Congress will find a way to renew a cut in the Social Security tax or agree on whether to extend long-term unemployment benefits.
Congress passed the tax cut last December for one year, and some lawmakers support extending it through 2012 because economic growth remains weak. Both measures would put cash in the pockets of Americans, who can spend it and help the economy grow.
The stalemate also shows lawmakers might not be able to make progress on anything budget-related in the coming months, said Robert Pavlik, chief market strategist with Banyan Partners in New York.
"It shows that there's a bigger problem at hand, and if they can't work to resolve these relatively small yet meaningful issues, what's going to happen if we get into a situation like Europe is in?" he said. "And we're kind of headed there."
The result was another day of heavy selling in a market that has become used to big swings.
The Dow finished down 248.85 points, or 2.1 percent, at 11,547.31. At its low point of the day, the Dow was down 342.
The Standard & Poor's 500 index dropped 22.67, or 1.9 percent, to 1,192.98. The S&P 500 fell 3.8 percent last week, its worst since September.
The Nasdaq composite index declined 49.36, or 1.9 percent, to 2,523.14.
Volatility seized the stock market in late July, when Congress was wrestling with whether to raise the limit on how much the federal government can borrow.
The Dow rose or fell 100 points or more on 15 trading days in August, 16 in September and 15 in October. Monday was its 10th triple-digit move this month, with six trading days to go.
"People are getting so short-term-oriented now that all they know is how to make day trades," he said.
The selling swung the Dow from a gain for the year to a loss, the first time that has happened in a month.
The declines Monday were broad. Energy and technology stocks lost the most. All 30 stocks in the Dow average fell, led by Boeing Co. with a 4.7 percent decline.
The dollar rose along with U.S. Treasury prices.