NEW YORK (CNNMoney.com) - Stocks kicked off the week by taking another beating as investors awaited the first of two key inflation reports and a speech by Federal Reserve Chairman Ben Bernanke, both of which will be pored over for clues to the direction of interest rates.

The Dow Jones industrial average (down 99.34 to 10,792.58, Charts) lost nearly 1 percent while the tech-laden Nasdaq composite (down 43.74 to 2,091.32, Charts) tumbled more than 2 percent. The broader Standard & Poor's 500 index (down 15.90 to 1,236.40, Charts) sank 1.3 percent.

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Oil prices fell sharply, Treasurys slipped and the dollar rose.

Monday's decline continues the recent downward trend that saw U.S. markets fall 3 to 4 percent last week on top of steep declines in May.

Bernanke's speech, scheduled for 7:30 p.m. ET Monday at a banking industry event in Washington, was sure to be closely watched for signs the Fed will or will not continue its campaign of interest rate hikes.

This week also sees the issue of two key inflation reports, and investors will get the first one Tuesday in the form of the Producer Price Index. Wednesday brings the more closely watched Consumer Price Index.

"The markets were focused on global growth momentum," said Subodh Kumar, chief U.S. investment strategist at CIBC World Markets. "They used to be ignoring inflation aspects, but now everyone is talking about it."

A week ago a speech by Bernanke that was seen as hawkish on the threat of inflation raised expectations for future Fed interest rate hikes and started the sell-off in the markets.

Another Fed official echoed those sentiments again Monday.

"The core CPI (the consumer price index excluding food and energy) has increased at an annualized rate of more than 3 percent during the past three months. This inflation picture, if sustained, exceeds my comfort level," Federal Reserve Bank of Cleveland President Sandra Pianalto said in a speech, according to Reuters.

But balancing that out were comments from another Fed member, who said more rate hikes weren't necessarily in order.

"If you asked me today, 'Sue, where are you going to stop?' I couldn't tell you, because we're in the range that we need to be, I think," Federal Reserve Board Governor Susan Bies said in answer to a question after speaking on banking issues to the Financial Women's Association, Reuters reported.

Some traders are concerned the Fed may raise rates too much and end up putting the kibosh on economic expansion.

"The Federal Reserve has such a history of overshooting when they raise rates, I think that's what's weighing on markets," said Barbara Marcin, a fund manager at Gamco.

Inflation has been on investors' minds as they search for clues about whether the Federal Reserve will hike rates for the 17th straight time when it meets June 28-29 and, more importantly, what it intends to do in the months ahead.

Unlike the last two years, when the Fed made it plain it would continue to raise rates at a measured pace, central bank policy-makers have now said they simply don't know what will come next and are watching the economic numbers, a position made even more clear by today's conflicting comments from the Fed members.

Stock investors don't like higher interest rates because they ultimately slow the flow of money through the economy and put the brakes on corporate profit growth, thus making stocks less appealing.

Tech stocks led the decline, with the Amex Networking Index falling over 4 percent.

Falling crude prices also hit oil companies, leading to a 4 percent drop in Philadelphia Oil Services Sector Index.

Alberto, the first tropical storm of the Atlantic season, looked set to steer clear of oil infrastructure as it swirled in the Gulf of Mexico on a track to make landfall in western Florida.

The news relieved oil traders, jittery after last season's storms devastated wide swaths along the Gulf Coast and knocked out much of the country's oil and gas production.

U.S. crude for July delivery lost $1.27 to settle at $70.36 a barrel on the New York Mercantile Exchange.

In corporate news, Wireless technology firm Qualcomm (down $2.25 to $41.19, Research) fell over 5 percent after it sued Nokia (Research) for patent infringement. An analyst told Reuters a big part of Qualcomm's revenue came from royalty fees and the suit was spooking investors.

Disney (down $0.43 to $28.90, Research) fell over 1 percent after Citigroup downgraded the media and entertainment company to "hold" from "buy," citing the recent run-up in share price.

Power generator NRG Energy (down $3.93 to $46.92, Research) sank about 8 percent after rival Mirant (down $0.07 to $24.38, Research) withdrew an unsolicited $8 billion bid for the company. NRG rejected the offer Friday, calling the offer undervalued.

Lehman Brothers, the nation's fourth-largest investment bank, reported sharply higher second quarter earnings that beat Wall Street estimates. But trading revenue fell from the first quarter, and Lehman (down $3.60 to $62.01, Research) shares lost over 5 percent.

Also helping Monday was news late Friday afternoon that the United Auto Workers union and bankrupt auto parts maker Delphi (Research) had reached an agreement on a buyout offer for union members there. The move is seen as reducing the risk of a strike that could cripple General Motors (up $0.43 to $25.78, Research), Delphi's former corporate parent that is helping to pay for the offer.

UAW President Ron Gettelfinger, in a message to members on the eve of the union's convention this week, warned that "The challenges we face aren't the kind that can be ridden out. They're structural challenges, and they require new and farsighted solutions." Those comments were seen as preparing the rank and file for further concessions.

Shares of Dow component GM gained 1.7 percent

Major markets closed mostly higher Monday in Asia on a report that showed a 3.1 percent gain in Japan's gross domestic product.

Major European markets finished lower as steelmaker Arcelor again rejected a $28 billion takeover offer from Mittal Steel (Research) and urged shareholders instead to support a proposed merger with Russia's Severstal.

Treasury prices were little changed, with the yield on the benchmark 10-year note holding around 4.97 percent.

The dollar gave up earlier gains and was little changed against the euro and yen.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of more three to one on volume of 1.62 billion shares. On the Nasdaq, winners topped losers by a margin of four to one as 1.97 billion shares changed hands.

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