(Corrects reason for McDonald's shares falling and removes reference to warning on profit impact of forex hit)
* McDonald's shares fall on slowing May sales
* Investors eye rising interest rates
* Indexes down: S&P 500 1.2 pct; Dow 1.2, Nasdaq 1.6 (Updates to mid-morning)
By Edward Krudy
NEW YORK, June 8 (Reuters) - U.S. stocks slid on Monday after McDonald's Corp posted lighter-than-expected May sales 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 said May sales at restaurants open at least 13 months were up 2.8 percent in the United States, helped by new coffee drinks and snacks.
That was significantly slower than the 6.1 percent growth in April.
Analysts said that the average of estimates was calling for May growth of around 3.6 percent.
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)