NEW YORK -- U.S. stocks fell sharply Monday, with the Dow Jones industrial average having its worst session this year, as Italian elections and looming spending cuts in the U.S. hit sentiment.The euro tumbled against other global currencies, particularly the Japanese yen, as investors tracked the outcome of national elections in Italy, where a potentially strong performance by Silvio Berlusconi's coalition is seen as a threat to the nation's austerity agenda.Uncertainty about Europe and the Friday deadline for U.S. lawmakers to reach a deal to avert automatic spending cuts, known as sequestration, had the the CBOE Volatility Index climbing about 35 percent."If the sequestration happens, and the big cuts are in place, I am pretty sure the market is going to pull back, maybe 3 percent to 5 percent, then go to all-time highs," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.After an 81-point rise early in the day, the Dow fell 216.40 points, or 1.6 percent, to 13,784.17, with all but three of its 30 components finishing in the red.The S&P 500 index fell 27.75 points, or 1.8 percent, to 1,487.85. The Nasdaq composite index shed 45.57 points, or 1.4 percent, to 3,116.25.Equities have fallen in recent sessions as strategists said the market could use a correction, or at least a pause, given an advance that has the S&P 500 up 5.9 percent so far this year."The market is already primed for a pullback. All it needs is a catalyst," Frederick said.After Italian polls closed in the second day of general-election voting, partial results pointed to an outcome that could end in a split parliament.Italy's state broadcaster pointed Monday to a stronger showing by Berlusconi and his allies in the upper house. A center-left coalition headed by Democratic Party leader Pier Luigi Bersani is reportedly on track for a majority in the lower house.A divided parliament in Italy could "run counter to reforms Italy has undertaken to be a member of good standing in the European Union, and could compromise Italy's debt and its position in the euro," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.Friday's deadline to avoid across-the-board reductions in federal spending brings another standoff between President Barack Obama and Republicans in Congress. If lawmakers fail to move, government spending will be cut by $85 billion in the last seven months of this fiscal year.