Stocks fell in a broad and steep decline on Tuesday, with the S&P 500 dropping for a fifth day to break under a key support level.

The industrial and materials sectors represented the stocks suffering the biggest drops. More than four-fifths of the stocks traded on the New York Stock Exchange slid, while about 80 percent of Nasdaq-listed shares declined.

The three major U.S. stock indexes fell more than 1 percent in midday trading, with the S&P 500 sliding below its 50-day moving average of 1,372.30. That area is viewed as the support level that will make or break the current uptrend as Wall Street enters the first-quarter earnings season.

Dropping below that level suggests a loss of momentum, and it looks pretty widespread, said Katie Stockton, chief market technician at MKM Partners in Greenwich, Connecticut, who added that the S&P 500 could fall down to about 1,350.

The CBOE Volatility Index <.VIX> surged 10.4 percent to 20.77, and was up for the eighth straight day, its longest streak of consecutive gains in nearly nine years. At its session high, the VIX touched 20.98 - up 11.5 percent for the day.

Dow component Alcoa Inc , a bellwether for the industrial sector, will kick off the quarterly earnings season after the closing bell when it releases its results. Alcoa's stock fell 2.6 percent to $9.35.

I like the fact that we're pulling back ahead of earnings. That gives more room to the upside for positive reactions, Stockton said.

Apple shares dropped quickly from hitting a new high of $644 per share to briefly top a $600 billion market capitalization. Its stock later fell 1.1 percent to $629.36.

The Dow Jones industrial average <.DJI> was down 202.76 points, or 1.57 percent, at 12,726.83. The Standard & Poor's 500 Index <.SPX> was down 20.50 points, or 1.48 percent, at 1,361.70. The Nasdaq Composite Index <.IXIC> was down 49.84 points, or 1.64 percent, at 2,997.24.

The Nasdaq also fell below its 50-day moving average of 2,988.42.

If the Nasdaq ends near that level or lower, it will be its first close below 3,000 since March 12.

The Standard & Poor's 500 Index is still up 8.1 percent so far this year - compared with its gain of 12 percent at the end of the first quarter. But the benchmark index has fallen 2.6 percent in the past four sessions as investors questioned the economy's strength and the U.S. Federal Reserve's resolve to keep the easy money flooding into the market.

Some analysts view the pullback as a buying opportunity, while others see it as the start of a long-awaited correction.

We've had a really strong run and we've needed a correction, so it makes sense for people to take profits off the table, said Weyman Gong, chief investment strategist at Signature in Norfolk, Virginia, which has $2.5 billion in assets under management. Still, if we go down further, we might use that as an opportunity to add exposure.

Friday's soft U.S. payrolls report added to the U.S. stock market's recent losses that were sparked by last Tuesday's minutes from the Fed's March policy meeting. The Fed's minutes were interpreted as showing the central bank was less than keen to launch more stimulus.

A Reuters poll on Monday showed most major Wall Street banks expect anemic growth in the U.S. job market and a struggling economic recovery to force the Fed to undertake another round of monetary stimulus.

Supervalu Inc shares jumped 12.8 percent to $6.00 after the third-largest U.S. supermarket operator reported better-than-expected earnings and issued a full-year profit forecast above Wall Street's view.

Best Buy shares hit their lowest since December 2008 and were at their session low after Chief Executive Brian Dunn resigned after 28 years with the world's largest consumer electronics retail chain. The stock was down 4.1 percent at $21.72.

(Editing by Jan Paschal)