NEW YORK — The stock market was not exactly surprised that a so-called supercommittee in Congress failed to reach a deal to cut the federal deficit. But since summer, investors have sold at the first hint of trouble.

So Monday, they sold big. The Dow Jones industrial average lost almost 250 points on a day when investors despaired over debt at home and abroad.

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 Congress will find a way to renew a cut in the Social Security tax or agree on whether to extend long-term unemployment benefits.

The result was another day of heavy selling in a market that has grown used to swings. The Dow finished down 248.85 points, or 2.1 percent, at 11,547.31.

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 fell 49.36, or 1.9 percent, to 2,523.14.

 


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