NEW YORK — Stocks declined early today after the government issued a stronger-than-expected report on consumer spending that also showed a jump in inflation.

The Commerce Department said consumer spending fell by 0.2 percent in June, after adjusting for inflation, the worst showing since February. A jump in gasoline prices helped push an inflation gauge tied to consumer spending up by 0.8 percent, the biggest increase since a 1 percent rise in February 1981. The increase in inflation offset some of the billions in dollars in checks sent to taxpayers as part of the government's economic stimulus plan.

While consumer spending came in stronger than expected, investors remained worried about the effects of rising prices on consumers as their spending is the lifeblood of the economy.

Investors seemed unmoved by a Commerce Department report that orders to U.S. factory jumped at the fastest pace in six months in June. The report reflected increases in petroleum prices and heavy demand for military equipment. Orders rose by 1.7 percent in June, more than double what had been expected. It was the biggest gain since December.

In midmorning trading, the Dow Jones industrial average fell 80.77, or 0.71 percent, to 11,245.55. The Dow logged several triple digit, back-and-forth swings last week, and ended the week down 0.39 percent.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 9.47, or 0.75 percent, to 1,250.84, and the Nasdaq composite index declined 22.53, or 0.97 percent, to 2,288.43.

Many on Wall Street will likely trade cautiously ahead of the Federal Reserve's policymaking meeting on Tuesday. The Fed is expected to keep interest rates steady at 2 percent, given the recent underwhelming readings on the economy. Inflation rose sharply for businesses in June as they paid higher prices for commodities, but it appears to have eased in July as the price of oil retreated in the second half of the month. That might take pressure off the Fed to raise rates as a means of containing inflation.

Bond prices declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.93 percent from 3.94 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 20 cents to $125.30 a barrel on the New York Mercantile Exchange.

Meanwhile, U.S. corporate earnings reports for the second quarter were still arriving, but Monday's flow was lighter. Cisco Systems Inc., News Corp. and Procter & Gamble Co. all report earnings Tuesday.

Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange, where volume came to 180.3 million shares.

The Russell 2000 index of smaller companies fell 11.87, or 1.66 percent, to 704.29.

Overseas, Japan's Nikkei stock average fell 161.41, or 1.23 percent to 12,933.1. In afternoon trading, Britain's FTSE 100 rose 0.01 percent. Germany's DAX index fell 0.48 percent, and France's CAC-40 fell 0.35 percent.