U.S. stocks continued to decline during Tuesday's early session, with the Dow Jones Industrial Average falling by 240 points. The three major indices retreated once again after Monday's rebound, as oil prices climbed and tensions with Iran persisted.

The Dow dropped 241.85 points, or 0.52%, to 45,966.62. The Nasdaq Composite declined 169.02 points, or 0.77%, to 21,777.74. The S&P 500 lost 33.74 points, or 0.51%, to 6,547.26.

Major U.S. equity benchmarks had rallied in the previous session, fueled by renewed hopes for a potential resolution to U.S.-Iran tensions. Shortly before markets opened on Monday, former President Donald Trump posted on his Truth Social platform that the U.S. and Iran had held "very good and productive talks aimed at fully and completely resolving our hostile status in the Middle East." The announcement sparked a sharp surge in stocks, with the Dow briefly rising more than 1,100 points intraday. A simultaneous cooling of oil prices provided additional support for the rebound.

However, Iranian state media later reported that no direct talks had taken place between the two nations, causing stock gains to pare back.

According to a report from a major financial news outlet citing informed sources, the U.S. did engage in a series of closed-door discussions with Iran through Middle Eastern intermediaries prior to Trump’s statement. Nevertheless, Arab mediators privately expressed skepticism about the likelihood of a swift agreement, given that significant differences remain between the two sides.

Moreover, investor confusion over the effectiveness of peace negotiations has grown, as military exchanges between Israel and Iran continued even after Trump’s comments on Monday.

Oil prices resumed their upward trajectory on Tuesday, with global benchmark Brent crude futures rising more than 1% to trade above $101 per barrel. West Texas Intermediate crude futures climbed 3%, surpassing $90 per barrel.

Despite Trump’s optimistic tone, Scott Chronert, U.S. equity strategist at Citigroup, suggested that investors are not yet out of danger. He stated, "We still have much to determine regarding how oil prices will ultimately behave and how those movements will influence the underlying economic landscape. For now, we view the 'down 5% to 10%' narrative as acceptable, but we must remain alert—risks are still present and quite substantial."

Over the weekend, Trump had threatened to strike Iranian power plants if the Strait of Hormuz was not reopened. Iran responded by warning it would target U.S. infrastructure in retaliation.

In premarket trading Tuesday, shares of Apollo Global Management fell more than 3% after the firm disclosed it would limit redemptions from its private credit funds.