Is the stock market rally of 2012 already over?
Nobody knows. But investors might be glad to know that the strong gain in stocks that began last Oct. 4 has survived six other 200-point drops in the Dow Jones industrial average like the one investors endured Tuesday.
On Nov. 21, the Dow fell 248 points after a congressional committee failed to reach a deal to reduce federal spending. Two days later, it fell 236 points because of worries about the European debt crisis.
But the Dow is still up almost 20 percent since its close on Oct. 3, 2011, and 4.4 percent this year — even after Tuesday's sell-off, driven by concerns about Europe and slower economic growth in China.
"We had one pullback," said Frank Fantozzi, CEO of Planned Financial Services, a Cleveland wealth management firm. "I think it's not indicative of anything, that all the sudden we're going to jump off a cliff, or that the market is going to go in a different direction."
The Standard & Poor's 500 index, a broader measure of the market than the Dow, is ahead 6.8 percent for the year.
Wall Street's gains since October have been built on an improving economy in the U.S. Just last week, the Dow closed above 13,000 for the first time since May 2008.
Even before Tuesday, sentiment was growing that stock buyers might have gotten ahead of themselves. The thinking was that stock prices are already assuming a U.S. recovery, while the risk of a European recession and a default in Greece were downplayed.
So Tuesday was a step back. The Dow Jones industrial average fell 203.66 points, closing at 12,759.15. It gave up more than a quarter of its 745-point advance since Jan. 1, the best start to a year in the U.S. market since 1998.
The sell-off, which spread west from Europe, also interrupted a period of unusual calm on Wall Street. Before Tuesday, the Dow had not fallen 100 points for 45 straight trading sessions, the longest streak since 2006.
"When things go straight up and don't ever correct or have some sort of normal pullback, as an investor, that makes me nervous," said Ed Hyland, a global investment specialist with J.P. Morgan Private Bank.
Stocks fell sharply from the opening bell and never mounted a serious comeback. The Dow was down as much as 227 points. All but one of the 30 stocks in the average finished the day lower. Intel managed a gain of 7 cents.
All 10 industry groups in the Standard & Poor's 500 declined. Bank stocks, which typically take a hit when there is any reason to worry about Greece, led the declines, followed by industrial and materials companies, which depend on strength in the world economy.
Alcoa, which makes aluminum and depends heavily on world economic demand, fell 4.1 percent, the worst of the Dow 30. China revised its projection for economic growth on Monday to 7.5 percent this year, down from 8 percent.
The Standard & Poor's 500 index fell 20.97 points, its worst decline since Dec. 8, to 1,343.36. The S&P had not declined 1 percent or more for 45 straight trading days, also the longest streak since 2006. That year, the S&P put together 94 in a row.
The Nasdaq composite index dropped 40.16 points to 2,910.32. The Nasdaq last week broke through 3,000 for the first time since December 2000, during the collapse in dot-com stocks.
Last year, sell-offs like this were much more common. The S&P fell by at least 1 percent on 48 trading days, roughly one in every five. During the depths of the financial crisis in the last four months of 2008, it happened roughly one in every three days.
Stocks fell more than 3 percent Tuesday in Germany, Spain and France, and 1.9 percent in Britain. Greece stepped up pressure on private investors to swap their Greek government bonds for replacements with a lower face value and interest rate. The deadline is Thursday.
The swap is vital for Greece to cut its debt and get a bailout of $172 billion. Without it, Greece could default later this month and rattle markets around the world.
The price of oil slipped $2.02 to $104.70 per barrel on the New York Mercantile Exchange. New York crude has risen from $96 last month amid fears of a disruption in global oil supplies driven by the potential for military conflict with Iran.
President Barack Obama said diplomacy can still resolve the crisis over Iran's possible pursuit of nuclear weapons and accused his Republican critics of "beating the drums of war." Iran dominated Obama's first news conference of the year.
The price of gold fell $31.80 per ounce, or 2.1 percent, to $1,672.10 per ounce. Silver, platinum and copper all fell more than 2 percent because of concerns about Europe and weaker economic demand in China.
"Global growth fears now are hitting home, and we're seeing selling across the board," said Matt Zeman, a market analyst for Kingsview Financial.
Yields on U.S. government debt also fell as investors moved their money into what they perceive to be a safer asset. The yield on the benchmark 10-year Treasury note fell to 1.96 percent from 2.01 percent late Monday. Bond yields fall when their prices rise.
Among stocks making big moves:
— Weight loss company Nutrisystem Inc. fell 10.9 percent after it reported a bigger-than-expected fourth-quarter loss and a disappointing outlook.
— General Motors fell 5.5 percent after saying it will pay €304 million, or $402 million, for a 7 percent stake in Peugeot, which will make it the French carmaker's second-largest shareholder after the Peugeot family.
— VeriFone Systems Inc. rose 7.9 percent after the maker of electronic payment systems predicted a bigger-than-expected 2012 profit.
— Apple fell 0.5 percent one day before the expected release of its iPad 3 tablet computer.
AP Business Writer Sandy Shore contributed to this story.