The incident with the clock occurs in Chapter 5 and is, in many ways, the most important chapter in the novel, for it is not until this chapter that Gatsby is finally reunited with his beloved Daisy. In the previous chapters, the reader learns about the couple's past. We observe how Daisy, in her absence, has become the focus of his imagination and the center of his world. All Gatsby has done, all he has acquired, has been for this woman.
It should come as no surprise, then, that reality will not match a dream. The past will clash with both the present and the future. The clock is more than just a clock. And it should DEFINITELY BE NOTED HERE that the clock is ALREADY BROKEN. It represents both the passage of time and Gatsby's inability to stop time from marching on. Breaking its "face" is another futile attempt to symbolically stop time, but is also a real way to snap Gatsby into the problems of the non-dream state.
Here is how it happens: As Daisy and Gatsby are awkwardly meeting at Nick's, Gatsby is "reclining against the mantlepiece" and a bit later his "head leaned back so far that it rested against the face of a defunct mantelpiece clock" as he stares at Daisy.
"We've met before," muttered Gatsby. His eyes glanced momentarily at me and his lips parted with an abortive attempt at a laugh. Luckily the clock took this moment to tilt dangerously at the pressure of his head, whereupon he turned and caught it with trembling fingers and set it back in place."
The "fourth wall," as they say in theater, that which separates the audience from the players, has been broken. Gatsby, finally in Daisy's presence, forgets the facade of the wealthy mover-and-shaker and becomes, once again, Jay Gatz.
Daisy, too, drops a lot of her socialite persona when she and Gatsby finally are together. Her tears of joy are real; she is honestly happy to have seen him succeed so wildly. But like the broken clock, neither can stop time, go back to the past, or control the future.