Expectations for peace in the Middle East drove down bond yields and oil prices, while investors moved into traditional economic sectors, helping U.S. stocks recover from earlier losses. The S&P 500 index closed slightly higher. The S&P 500 and the Nasdaq 100 both gained 0.2%. The Dow Jones Industrial Average rose 0.6%, setting its first new high since February, highlighting momentum beyond the technology and artificial intelligence sectors. "Markets remain constrained by interest rates. The current rally is still in a 'hope'-driven phase, reliant on a de-escalation in the Iran situation," said Joe Gilbert, portfolio manager at Integrity Asset Management. NVIDIA declined, even though the chip giant's quarterly results and revenue outlook largely met the market's high expectations. While analysts overall remain optimistic about AI spending prospects, some are beginning to question whether NVIDIA's explosive growth can be sustained amid increasing competition and rising investor concerns about sector valuations. "NVIDIA's earnings boosted Asian markets, but that positivity faded quickly as the Strait of Hormuz issue remains unresolved, and the 30-year U.S. Treasury yield holds firmly above 5%," said Dave Mazza, CEO of Roundhill Financial. Ralph Lauren led the gainers among S&P 500 components after reporting revenue and profit that exceeded analyst expectations. On the economic data front, U.S. manufacturing activity expanded in May at the fastest pace in four years as customers sought to stock up ahead of potential further price increases. Richmond Fed President Thomas Barkin stated that the ability of businesses and consumers to absorb the latest round of supply shocks will determine whether the Federal Reserve can continue to "look through" rising inflation without raising interest rates. At the close, the S&P 500 was up 0.2% at 7,445.72; the Dow Jones Industrial Average was up 0.6% at 50,285.66; the Nasdaq Composite was up 0.1% at 26,293.10; the Nasdaq 100 was up 0.2% at 29,357.27; and the Russell 2000 was up 0.9% at 2,843.453.