(Updates prices to late afternoon, adds analyst comments and

market details)

* Indexes up: Dow 0.72%, S&P 500 0.27%, Nasdaq 0.24%

* 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 main indexes turned

higher on Thursday as oil prices lost ground and investors hoped

for a Middle East peace deal even as the U.S. and Iran took

directly opposing stances over Tehran's uranium stockpile and

controls on the Strait of Hormuz.

Stocks clawed their way back to gains while oil prices shifted

from a rally to a slight decline as investors monitored social

media for news on peace progress. 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.

"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."

At 2:28 p.m. EDT, the Dow Jones Industrial Average

rose 360.41 points, or 0.72%, to 50,369.76, the S&P 500

gained 20.39 points, or 0.27%, to 7,453.36 and the Nasdaq

Composite gained 62.40 points, or 0.24%, to 26,332.76.

Investors were also reacting to a fresh batch of corporate

earnings. Walmart ( WMT ) tumbled 6.6% 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."

The S&P 500 consumer staples sector led losses

with a 1.7% drop, weighted down by Walmart's ( WMT ) fall and declines

in some other retailers that fell in sympathy, including Casey's

General Stores, down 3.8%, and Costco Wholesale ( COST )

, off more than 2%.

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

fell 1.5% 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 about 18% so far this year but the pace

of growth has slowed as investors believe Nvidia ( NVDA ) will face

tougher competition, not only from Big Tech but also from chip

rivals including Intel ( INTC ) and Advanced Micro Devices ( AMD )

.

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 11.3% 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 ) climbed 13.4%, D-Wave Quantum ( QBTS )

jumped 28%, Rigetti Computing ( RGTI ) gained nearly

27% and Infleqtion ( INFQ ) surged nearly 31%.

Intuit's shares plunged 19.8% 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.

Advancing issues outnumbered decliners by a 1.47-to-1 ratio

on the NYSE, where there were 158 new highs and 89 new lows. On

the Nasdaq, 3,012 stocks rose and 1,721 fell as advancing issues

outnumbered decliners by a 1.75-to-1 ratio. The S&P 500

posted 11 new 52-week highs and 4 new lows while the Nasdaq

Composite recorded 78 new highs and 100 new lows.