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 <.DJI> fell 101.80 points, or 1.16 percent, at 8,661.71. The Standard & Poor's 500 Index <.SPX> lost 11.46 points, or 1.22 percent, at 928.63. The Nasdaq Composite Index <.IXIC> 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)

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