Wall Street began the third quarter with an erratic session Tuesday as a mix of news made it clear the country is still deep in economic...

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NEW YORK — Wall Street began the third quarter with an erratic session Tuesday as a mix of news made it clear the country is still deep in economic problems but may have some positive trends.

The Dow Jones industrial average, down more than 150 points earlier, closed up 32.25 at 11,382.26.

Microsoft, one of the 30 Dow stocks, fell 64 cents to close at $26.87 a share. Boeing, also a Dow stock, fell 27 cents to $65.45, a 52-week low.

The Standard & Poor’s 500 index rose 4.91 to 1,284.91. The Nasdaq composite gained 11.99 to 2,304.97.

Prices rose early in the session, then turned sharply lower for much of the day and then recovered in late afternoon. The uneven performance wasn’t surprising — some bargain hunting was to be expected after a dismal first half, and in particular, a dismal June.

Still, the session brought more discouraging news for investors: Oil rose again toward record high levels, a report showed that U.S. manufacturers are still under duress. This all raised the market’s fears that the economy — still reeling from soaring commodities prices and the lingering credit crisis — is not any closer to turning around.

And while the Institute for Supply Management had an overall disappointing report on manufacturing in June, it also reported strong exports for U.S. factories.

Investors were also disappointed by another drop in construction spending due to the continuing slump in housing. The Commerce Department said construction spending fell 0.4 percent, slightly less than economists’ forecasts.

Analysis |

Commodities gained modestly in the first two months of the second quarter as stocks began to recover from March’s lows, but in June, the two asset classes diverged again.

Prices for grains, metals and oil have enjoyed huge run-ups since the credit crisis began last August. Investors sought a safe haven in hard assets such as gold. At the same time, economic growth in developing countries has boosted demand for commodities.

In the first two months of the second quarter, the Dow Jones-AIG commodity index and the Standard & Poor’s 500 gained almost in lock-step as investors began putting money back into stocks.

But inflation fears, sparked by oil’s repeated record high, and continued financial sector woes began to prey on stocks. In June, the commodity index gained almost 9 percent while the S&P 500 sank 8 percent.

Energy was the quarter’s biggest gainer, as the weak dollar made oil, denominated in the U.S. currency, more appealing for foreign investors.

Light, sweet crude oil touched past a record $143 a barrel on the last day of the quarter before settling back to $140.

Oil’s rise has been blamed on speculators, as opposed to commercial buyers, as well as demand from developing economies and geopolitical tensions in the Middle East, which could disrupt supplies.

Deutsche Bank energy economist Adam Sieminski expects oil to average $120 a barrel this year and in 2009 and says demand growth should slow amid high prices.

Industrial metals continued to climb in the second quarter, while precious metals slowed after last year’s strong gains.

Platinum, for instance, jumped 34 percent in the first quarter but barely eked out a gain in the second.

Soybeans and corn soared as unfavorable weather, including floods in the Midwest, damaged crops. Wheat prices declined due to anticipation of a record 2008 harvest.

Barclays analyst Gayle Berry expects corn and soybeans to continue their rise on growing demand from China and the biofuel industry, amid constrained supplies.