For us, it happened in 1st grade. Same thing, not staying on task, not listening, grade on level but sometimes below since he would only listen to the first part of the instructions and then zone out and therefore do the work incorrectly. It began to escalate and he started getting really angry and grinding his teeth and ultimately, he hit his teacher (who he adored) and was suspended. Within the first two weeks of first grade, his teacher called to tell us about his behavior. We were like you, totally confused and wondering what we did or didn't do and what the heck should we do now!!?? The stress began!
We put him in counseling thinking it was some sort of anger management problem for a 5 y/o! She was great and he saw her for basically all of 1st grade, but ultimately, she recommended we have him evaluated. After many months of trying to get an appointment (we went to Mt Washington Pediatric Hosp in Balt) he was diagnosed with ADHD. I cannot stress the amount of stress my hubby and I went thru that year. We actually thought he was going to fail first grade!! He was terrible to his teacher - or extremely sweet, he was awful to his classmates - or their very best friend. It was a Jackyl and Hyde kind of thing and we were just overwhelmed and lost.
We decided to put him on medication for the ADHD (everyone has to decide how they feel about it, but we had most of a school year to see what he was like off meds, so we decided to go ahead with them). The transformation was amazing. He still has tendencies to be a little scattered, but he is much easier to refocus now. Within a couple weeks on meds, his teacher called to tell us how wonderful his behavior was and that they were able to put him in the upper math level where he belonged - now that he was able to focus and listen.
You son may not have any issues like ADD/ADHD or similar, but if you're having this much trouble (and stress), contact his pediatrician and see what she says. If you need to find a counselor, then do so. If you need to have him evaluated - even just to rule it out, then do so.
As always, consistency is key. I know it's hard and I really feel for what you're dealing with. I remember feeling so lost and useless.
I'm not sure what county you're in, but the school should offer some preliminary evaluations as well. Get them involved - these are free services that the school is required to offer but you usually have to ask and sometimes insist for them to do so. Work all the angles to get as much help as you can.
Let me know if you'd like any more info!!
Good luck
J.