Stocks fell on Monday after McDonald's Corp posted lighter-than-expected monthly sales and a report that Apple Inc would price new iPhones aggressively, signaling that consumer spending may remain a concern.

With the market in the midst of a three-month rally, investors are looking for more proof of an improving economy in order to fuel a continued advance while also becoming wary of the ongoing rise in interest rates.

The catalysts are going to be better economic data and any kind of visibility from companies on their business, which we are not seeing at all, said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.

Apple shares slid 2.7 percent to $140.73 and was the top weight on the Nasdaq after CNBC reported the company would introduce aggressively lower price-points for new iPhones. Earlier, Apple unveiled a cheaper Mac notebook at its annual developers' conference.

It becomes a margin compression story, and there are only so many iPhones you can sell at full price, added Kruszenski. That's what people don't want to see with a company that is growing so fast.

The Dow Jones industrial average <.DJI> dropped 95.52 points, or 1.09 percent, to 8,667.61. The Standard & Poor's 500 Index <.SPX> fell 9.29 points, or 0.99 percent, to 930.80. The Nasdaq Composite Index <.IXIC> slid 23.92 points, or 1.29 percent, to 1,825.50.

McDonald's was the primary laggard on the blue-chip Dow after the world's largest hamburger chain said May sales at U.S. restaurants open at least 13 months rose by 2.8 percent but were significantly less than the 6.1 percent growth in the previous month. The stock lost 2.5 percent to $58.33.

Another stumbling block for stocks could be a continued rise in bond yields as rising interest rates would boost borrowing costs for consumers and businesses, further curbing spending.

The difference between long-dated and short-dated treasuries has been widening in the past few weeks, although in the last two days, the trend has reversed as short-term yields have risen on speculation the U.S. Federal Reserve may raise interest rates.

AT&T Inc shares slid 1.6 percent to $24.17 after the sole carrier of Apple's iPhone was removed from the conviction buy list at Goldman Sachs, which cited the recent underperformance of its shares.

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 2.6 percent to $55.67, while 3M Co shed 2.1 percent to $59.67. The S&P Materials index <.GSPM> fell 1.8 percent.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)