Stocks fell on Tuesday after a disappointing outlook from 3M Co and weak domestic sales at McDonald's Corp fanned worries that sluggish consumer spending threatened the economic recovery.

Equities also faced pressure from a stronger U.S. dollar as investors sought more safe-haven assets amid worries about Dubai's unresolved debt problems and Fitch Ratings' downgrade of Greece's bond rating.

Diversified manufacturer 3M fell 1.2 percent to $76.98 after it 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 were down 2.3 percent to $60.52 after the world's largest hamburger chain said sales at its established U.S. restaurants dipped in November as competitors pushed low prices to attract customers.

If you don't constantly feed this market good news, it's going to sell off. It's just very fragile market psychology, said Howard Ward, chief investment officer for the GAMCO Growth Fund in Rye, New York.

The Dow Jones industrial average <.DJI> was down 98.63 points, or 0.95 percent, at 10,291.48. The Standard & Poor's 500 Index <.SPX> was down 9.45 points, or 0.86 percent, at 1,093.80. The Nasdaq Composite Index <.IXIC> was down 10.01 points, or 0.46 percent, at 2,179.60.

The disappointing news from 3M and McDonald's overshadowed optimism late Monday from FedEx Corp , which gained 2.8 percent to $90.00, after forecasting second-quarter earnings would easily beat analysts' estimates.

U.S. stocks are now up around 60 percent from their March lows.

In another sign of weak consumer spending, supermarket operator Kroger Co reported quarterly results far below expectations and cut its full-year forecast.

Kroger shares slumped 12 percent to $20.11 while the S&P Consumer Staples index <.GSPS> slipped 1.3 percent.

The greenback <.DXY> gained 0.7 percent against a basket of six other major currencies.

President Barack Obama's announcement of measures to create more jobs in the struggling recovery had little immediate impact on stocks. Obama proposed small business tax cuts, fresh infrastructure spending and energy efficiency rebates.

(Additional Reporting by Leah Schnurr; Editing by Kenneth Barry)

New York Dubai