NEW YORK - Stocks fell in early trading after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed.

Investors are also charting the path of Tropical Storm Gustav as it heads toward the Gulf of Mexico and its oil rigs and refineries.

The Commerce Department said personal incomes fell by 0.7 percent in July - well beyond the drop of 0.1 percent that analysts polled by Thomson IFR had predicted on average. That reflects the waning impact of tax rebate checks that Americans received this spring.

As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending actually fell by 0.4 percent in July.

Wall Street has been particularly concerned about Americans' ability to help the economy grow, since rising prices for gas and food have strapped many household budgets.

Meanwhile, investors were watching Gustav heading toward the Gulf of Mexico and its oil installations.

Light, sweet crude oil rose $2.39 to $117.98 on the New York Mercantile Exchange. So far, oil trading has been fairly orderly as the storm progresses, although there is concern about damage from Gustav or a disruption in the flow of gasoline and other fuel from Gulf Coast refineries.

In the first hour of trading, the Dow Jones industrial average fell 33.71, or 0.29 percent, to 11,681.47.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 5.35, or 0.41 percent, to 1,295.33, and the Nasdaq composite index fell 24.00, or 1.00 percent, to 2,387.64.