Updates prices to late afternoon, adds analyst comments and market details

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 .DJI rose 360.41 points, or 0.72%, to 50,369.76, the S&P 500 .SPX gained 20.39 points, or 0.27%, to 7,453.36 and the Nasdaq Composite .IXIC gained 62.40 points, or 0.24%, to 26,332.76.

Investors were also reacting to a fresh batch of corporate earnings. Walmart WMT.O 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 .SPLRCS led losses with a 1.7% drop, weighted down by Walmart's fall and declines in some other retailers that fell in sympathy, including Casey's General Stores CASY.O, down 3.8%, and Costco Wholesale COST.O, off more than 2%.

Shares of Nvidia NVDA.O, 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 will face tougher competition, not only from Big Tech but also from chip rivals including Intel INTC.O and Advanced Micro Devices AMD.O.

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.N rose 11.3% on news that the Trump administration will fund a handful of quantum computing companies, including a new IBM venture, in exchange for stakes in some of the firms.

GlobalFoundries GFS.O climbed 13.4%, D-Wave Quantum QBTS.N jumped 28%, Rigetti Computing RGTI.O gained nearly 27% and Infleqtion INFQ.N surged nearly 31%.

Intuit's INTU.O 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.