3M, McDonald's weigh on Wall Street

NEW YORK (Reuters) - Stocks fell on Tuesday after a disappointing outlook from 3M (MMM.NY)Co and a second consecutive month of domestic sales declines at McDonald's Corp triggered worry about the pace of consumer spending.

3M fell 1.4 percent to $76.82 after the diversified manufacturer gave a 2009 outlook that fell short of Wall Street's consensus and provided investors with a cautious initial view of its 2010 earnings.

Shares of McDonald's shed 1.9 percent to $60.78 after it said sales at its established U.S. restaurants dipped in November as competitors pushed low prices to bring in consumers.

The disappointing views offset optimism late Monday from FedEx Corp , which rose 2.1 percent to $89.33, after forecasting second-quarter earnings would easily beat analysts' estimates.

"McDonald's highlights the plight of the consumer, but the good news came yesterday from FedEx," said Quincy Krosby, market strategist for Prudential Financial in Newark, New Jersey.

"This is part of the tug-of-war in the economic landscape but also in the market. The market had a very nice run up, and we may be seeing a little bit of the froth coming off."

Another sign of tentative consumer spending came from supermarket operator Kroger Co , which reported quarterly results far below expectations and cut its full-year forecast.

The S&P Consumer Staples index <.GSPS> slipped 1.3 percent.

The Dow Jones industrial average <.DJI> dropped 80.87 points, or 0.78 percent, to 10,309.24. The Standard & Poor's 500 Index <.SPX> fell 8.51 points, or 0.77 percent, to 1,094.74. The Nasdaq Composite Index <.IXIC> lost 15.87 points, or 0.72 percent, to 2,173.74.

Equities also faced pressure from a climb in the U.S. dollar and a dip in commodities, while continuing concerns about the developing debt situation in Dubai hit overseas stock markets.

The greenback <.DXY> added 0.5 percent against a basket of six other major currencies.

(Editing by Padraic Cassidy)

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