Wall Street succumbed to its ongoing angst today, giving up a sharp advance and turning moderately lower after falling oil prices failed...

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NEW YORK — Wall Street succumbed to its ongoing angst today, giving up a sharp advance and turning moderately lower after falling oil prices failed to calm the market’s nervousness about the economy and the financial sector.

The Dow Jones industrial average closed down 26.63 at 11,516.92, after rising more than 246 points in the early going. On Friday, the blue chip index lost 171 points.

Microsoft, one of the 30 Dow stocks, slipped 19 cents to close at $27.10 a share. Boeing, also a Dow stock, gained 31 cents to $65.87.

The biggest drop among the 30 Dow components came from aluminum producer Alcoa, which fell $1.67, or 5.2 percent, to $30.46.

Broader stock indicators also turned lower after moving sharply higher in early trading. The Standard & Poor’s 500 index fell 5.25 to 1,277.58, and the technology-dominated Nasdaq composite index fell 18.28 to 2,349.24.

The Dow initially surged as oil prices dropped as low as $105.46 a barrel on reports that the Gulf Coast and its oil facilities were spared heavy damage from Hurricane Gustav.

But the positive effect of the storm’s outcome on stocks was short-lived. Falling commodities prices caused the stocks of oil and metals companies to sink, dragging on the broader market, and the technology sector was also weak.

By midafternoon, crude oil lifted off its lows of the day, settling down $5.75, or 5 percent, to $109.71 a barrel and signaling to some traders that oil has the potential to rebound as quickly as it sold off.

“We could have another storm announced tomorrow, and it’d be back up again,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.

Meanwhile, the financial sector pared some of its earlier gains, with investors still fearful that a weak housing market and tight credit environment will keep racking up losses for the nation’s major money centers.

“The one problem with financials is that maybe the Street has a good handle on subprime, but they do not have a good handle on commercial or industrial lending,” said Philip Dow, managing director of equity strategy at RBC Dain Rauscher.

Due to the high level of uncertainty in the market — not to mention low summer trading volumes, which tend to add to volatility — investors recently have appeared to be aiming for quick, day-to-day profits as opposed to committing to a long-term strategy, Dow said.

“We’ve had this manic tape for some time,” he said. “By and large, it’s just a market that’s victim to whatever the news of the day is, without a whole lot of conviction.”

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.76 percent from 3.82 percent late Friday. The dollar rose against most other major currencies, while gold prices fell sharply.

The economic outlook is uncertain, with some sectors remaining resilient and others — especially those reliant on consumers — showing signs of struggle.

The Institute for Supply Management (ISM), a trade group of purchasing executives, said today its index on manufacturing activity fell marginally to 49.9 in August — as expected — from 50 in July. A reading below 50 indicates contraction. The ISM also found that inflation lessened.

Bill Dwyer, chief investment officer at MTB Investment Advisors in Baltimore, said the reactions of the energy and stock markets today illustrate the overall uncertainty about the economy.

“It just shows you how unstable the market is based on the perception of the macro economic outlook. It changes daily. There isn’t a consistent viewpoint of what is actually happening in the economy,” he said.