Stocks fall, raising questions about January's rally

Investors are wondering whether January's stock rally is fading after major U.S. indexes headed down for the third straight day.

Stocks fell this morning due to discouraging developments out of Europe, where efforts to help prop up Greece's economy appear to be stumbling.

The Dow Jones industrial average fell 78.48 points, or 0.6% to 12581.98 in early trading. 

The Dow is still up almost 3% for the year, but last week it fell four out of five days, ending the week down for the first time since December.

The slow, steady rally of the last weeks has come as a relief to investors tired out from the volatility that marked the markets of 2011. But traders and economists are now asking if the optimism has gone too far.

"Within the market, high risk stocks have outperformed low risk stocks: the question now is whether this can, and will, continue," economists with Nomura Equity Research wrote in a note to clients. 

Bullish analyst Don Hays wrote this morning that "the market is now getting a little winded and a pause to refresh would certainly be called for (and healthy)."

In Europe, concern has arisen after Greece rejected calls for more supervision of its economy by the European Union. That has slowed down efforts to prop up the Greek economy and stop the problems there from spreading to other weak European economies.

This week will provide a number of important pieces of data to signal whether the U.S. economic recovery is continuing to strengthen. On Wednesday, the monthly data on manufacturing growth will be released, while Friday will bring the monthly jobs report.

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