(Recasts with preliminary close of trading, adds analyst

comments )

* Choppy afternoon trading in Wall Street indexes

* Nvidia ( NVDA ) down after quarterly results

* Walmart ( WMT ) falls after giving conservative annual targets

* Quantum stocks jump on US investment in exchange for

stakes

* US manufacturing activity rises to four-year high in

May

By Sinéad Carew and Utkarsh Hathi

May 21 (Reuters) - Wall Street's benchmark S&P 500 index

closed slightly higher after Thursday's choppy session as oil

prices finished lower and investors hoped for a Middle East

peace deal even as the U.S. and Iran appeared to take directly

opposing stances over Tehran's uranium stockpile and control of

the Strait of Hormuz.

After spending the morning in the red, stocks clawed their way

back to gains in afternoon trading while oil prices shifted from

a rally to a decline as investors monitored social media for

news on the peace progress. While U.S. Secretary of State Marco

Rubio told reporters there had been "some good signs" in talks

with Iran, he also said a diplomatic deal between the U.S. and

Iran would be unfeasible if Tehran implemented a tolling system

in the Strait of Hormuz, which is a key conduit for oil

transportation.

Earlier on Thursday, a Reuters report signaled a hardening

stance from Tehran with Supreme Leader Ayatollah Mojtaba

Khamenei issuing a directive that the uranium should not be sent

abroad. However, President Donald Trump said the U.S. will

eventually recover Iran's stockpile of highly enriched uranium -

which Washington believes is destined for a nuclear weapon

though Tehran says it is intended purely for peaceful purposes.

Jason Pride, chief of investment strategy and research at

Glenmede, attributed volatility during Thursday's session to

investor reactions to speculation about geopolitics.

"We're sitting at high levels of valuation partly driven by

earnings," said Pride. "That overshadowed the concerns around

Iran but now earnings season is largely over. We're not going to

suddenly get any more good surprises out of earnings, which

means that market attention is now back to Iran. The market, on

a near-term basis, is going to be finding its way based on

rumors or actual announced deals regarding Iran."

According to preliminary data, the S&P 500 gained

11.54 points, or 0.16%, to end at 7,444.51 points, while the

Nasdaq Composite gained 25.82 points, or 0.09%, to

26,296.18. The Dow Jones Industrial Average rose 278.91

points, or 0.56%, to 50,288.26.

"The silver lining is that from a market perspective, the

fragile ceasefire is still holding. It's positive there's still,

according to news reports, the possibility of an off-ramp. Oil

and market sentiment is very sensitive to every headline," said

Marc Dizard, chief investment officer at Huntington Wealth

Management. He added, however: "Nobody knows, except the inner

circle in Iran and in the U.S., how much progress is truly being

made."

Investors were also reacting to the latest batch of earnings

from big U.S. companies. Walmart ( WMT ) shares tumbled after

the largest global retailer forecast second-quarter profit below

estimates and maintained its annual targets. CFO John David

Rainey said consumers were feeling pressure from high fuel

prices and that if "elevated cost environment persists, we'd

expect somewhat higher retail price inflation in Q2 and the

second half of the year."

Among the S&P 500's 11 major industry sectors, consumer

staples led losses as they were weighed down by

Walmart's ( WMT ) fall along with declines in some other retailers that

fell in sympathy, including Casey's General Stores and

Costco Wholesale ( COST ).

Shares of Nvidia ( NVDA ), the world's most valuable company,

fell as some investors took profits after the AI heavyweight's

upbeat second-quarter revenue forecast and $80 billion

share-repurchase program. Its stock has gained sharply so far

this year but the pace of growth has slowed as investors believe

Nvidia ( NVDA ) will face tougher competition from chip rivals including

Intel ( INTC ) and Advanced Micro Devices ( AMD ) going forward.

In economic data, jobless claims fell last week, pointing to

continued labor market resilience, giving the U.S. Federal

Reserve room to keep its focus on inflation risks.

U.S. manufacturing activity rose to a four-year high in May as

businesses built inventories to guard against potential

shortages and rising prices tied to the Iran war.

Among other movers, IBM ( IBM ) rose on news that the Trump

administration will fund a handful of quantum computing

companies, including a new IBM ( IBM ) venture, in exchange for stakes

in some of the firms.

GlobalFoundries ( GFS ) also climbed along with D-Wave

Quantum ( QBTS ), Rigetti Computing ( RGTI ) and Infleqtion ( INFQ )

.

Intuit's shares plunged after the software maker

lowered the annual revenue forecast for its tax-filing software,

TurboTax, and said it would cut 17% of its full-time workforce.