Supercommittee failure sends Dow down 250

NEW YORK (AP) - The stock market was not exactly surprised that a so-called supercommittee in Congress failed to reach a deal to cut the federal budget 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 on a day when investors despaired over debt problems at home and abroad.

Members of the special committee, created in August to come up with $1.2 trillion in deficit cuts over 10 years, indicated all day that there would be no deal. After the market closed, the committee's bipartisan leadership made it official.

"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.