Stocks remain the prime focus of most investors. But increasingly, the drama is occurring in other markets. So it was again on Tuesday as major averages sulked lower in relatively quiet trading while much of the fireworks occurred in foreign exchange and precious metals. The Dow Jones Industrial Average shed 1.1% to 8535.39, closing near its intraday low after trading as high as 8638.64. Similarly, the S&P 500 slid 0.8% to 902.99 and the Nasdaq Composite fell 0.6% to 1392. Once again, trading activity was muted, with 1.24 billion shares exchanged on the Big Board and 1.1 billion in Nasdaq trading. Stock proxies were hit by a profit warning by McDonald's ( MCD), which fell 8% and was the second-biggest drag on the price-weighted Dow after 3M ( MMM), which lost 1.7%. Coincidentally (or not), 3M was among the Dow's biggest positive influences during Monday's rally. Much of the focus was on retailing stocks Tuesday after disappointing results from Circuit City ( CC), cautious guidance from Best Buy ( BBY), and weaker-than-expected December sales data from Target ( TGT). The S&P Retail Index fell 2.4%. On the macro front, stocks were weighed down by renewed and heightened concerns about potential war with Iraq. Secretary of State Colin Powell said concerns about the veracity of Iraq's weapons declaration were "well founded." Powell's comments helped exacerbate early weakness in the dollar, which persisted despite some stronger-than-expected housing starts data and renewed attempts by Japanese officials to jawbone the yen lower. (Among other reports, U.S. industrial production/capacity utilization and the Consumer Price Index were mainly in line with expectations.) Early on, the euro traded as high as $1.0332, a three-year peak vs. the dollar, which hit a one-month low vs. the yen at 120.36 yen. Simultaneously, the Swiss franc hit a four-year high vs. the dollar. Meanwhile, gold traded as high as $341.70 per ounce midmorning, its highest level since June 1997 and another indication of the dollar's woes.