Updates with late-morning trading

By Purvi Agarwal and Twesha Dikshit

March 24 (Reuters) - Wall Street's main indexes were mixed in choppy trading on Tuesday as investors assessed the prospect of easing Middle East tensions, a day after President Donald Trump postponed strikes on Iranian power plants that sparked a relief rally.

Though the indexes opened lower, they pared much of their declines as investors were hopeful of a de-escalation in the Middle East, even as Tehran denied negotiations with the U.S., disputing Trump's comment on "productive talks".

"Investors are trying to wrap their heads around what's going on and where the president is taking this war ... there's a lot of volatility in the market," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

"Investors don't want to be completely out of this market because the president is difficult to figure out ... you could be hurt either being long or being short (in the market)."

Meanwhile, private credit concerns resurfaced after a report said Ares Management ARES.N limited redemptions at 5% at its private credit fund, along with Apollo Global Management APO.N, as withdrawal requests surged. Both firms pared earlier declines and Ares edged higher.

The companies' decisions mirror those of BlackRock BLK.N and Morgan Stanley MS.N earlier this month.

Peers Blackstone BX.N and Carlyle CG.O dipped 1.3% each.

At 11:53 a.m. ET, the Dow Jones Industrial Average .DJI rose 178.17 points, or 0.39%, to 46,386.64, the S&P 500 .SPX gained 12.94 points, or 0.20%, to 6,593.94 and the Nasdaq Composite .IXIC lost 44.61 points, or 0.20%, to 21,902.15.

On the S&P 500, gains in energy .SPNY and financial stocks .SPSY helped offset declines in technology .SPLRCT and communication services .SPLRCL sectors, leaving the index subdued.

A rise in Goldman Sachs GS.N and Caterpillar CAT.N lifted the Dow, while tech stocks weighed on the Nasdaq.

U.S. business activity slowed to an 11-month low in March as the Middle East war raised prices for energy products and other inputs, a survey showed.

On Monday, Wall Street marked its biggest one-day gain since February 6 as investors drew comfort from Trump's comments.

The conflict has driven oil prices sharply higher, reviving inflation jitters and complicating the interest rate outlook for central banks. The U.S. Federal Reserve struck a hawkish tone last week, projecting only one reduction in 2026.

Money markets are no longer pricing in any rate cuts this year, compared with two reductions expected before the Middle East conflict erupted. Expectations for hikes nudged higher amid escalating tensions last week, but were quickly unwound after Trump's comments on Monday, according to CME's FedWatch Tool.

Among individual movers, shares of Jefferies JEF.N gained 3.7% after the Financial Times reported that Japan's Sumitomo Mitsui Financial Group 8316.T is working on plans for a possible takeover of the investment bank.

Cosmetics maker Estee Lauder EL.N fell over 9% to an over nine-month low, facing investor backlash as it was in talks for a potential merger with Spanish beauty group Puig Brands PUIGb.MC.

Barclays lifted its 2026 year-end target for the S&P 500 index .SPX to 7,650 from 7,400, citing stronger earnings expectations that outweigh macro risks like Middle East tensions, AI-driven disruption and stress in private credit.

Advancing issues outnumbered decliners by a 1.16-to-1 ratio on the NYSE and by a 1.2-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and 17 new lows, while the Nasdaq Composite recorded 32 new highs and 129 new lows.

(Reporting by Purvi Agarwal and Twesha Dikshit in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel)

((Purvi.Agarwal@thomsonreuters.com;))