Wall Street drops as McDonald's weighs

NEW YORK (Reuters) - Stocks slid on Monday after McDonald's Corp warned that second-quarter profit could be hurt by currency swings and investors worried that rising interest rates may hamper a recovery.

With the market rallying for three months, investors are increasingly looking for more concrete evidence of an improving economy to sustain the advance.

Additionally, a continued rise in bond yields could be another headwind for stocks since rising interest rates may boost borrowing costs for consumers and businesses.

The Dow Jones industrial average fell 101.80 points, or 1.16 percent, at 8,661.71. The Standard & Poor's 500 Index lost 11.46 points, or 1.22 percent, at 928.63. The Nasdaq Composite Index dropped 30.00 points, or 1.62 percent, at 1,819.42.

"In general, the feeling among traders is that we're due for a correction," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.

Regarding interest rates, Ghriskey said: "As rates rise, that increase gets passed on."

McDonald's shares were the top drag on the Dow, falling 2.7 percent to $58.22, after the company warned that second-quarter profit could be reduced by 8 cents to 9 cents a share if foreign exchange rates remained around current levels.

Other drags were big manufacturers and natural resource companies that have had a strong run-up in recent weeks. Freeport-McMoRan Copper & Gold Inc fell 3 percent to $55.52, while 3M Co fell 2 percent to $59.71.

U.S. government securities prices were mixed as the view the recession will end later this year and the Federal Reserve could raise interest rates hurt shorter-dated Treasuries.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)