New York, Dec 5 (IANS): US stocks plunged on Tuesday with all three major indices erasing more than 3 per cent, amid worries over inverted yield curve signalling a possible economic slowdown.

The Dow Jones Industrial Average decreased 799.36 points, or 3.10 per cent, to 25,027.07. The S&P 500 decreased 90.31 points, or 3.24 per cent, to 2,700.06, Xinhua reported.

The Nasdaq Composite Index fell 283.09 points, or 3.80 per cent, to 7,158.43.

The US three-year treasury note yield stood at 2.805 percent, higher than the five-year note on Tuesday. The inverted yield curve caught investors' attention because historical statistics showed that when short-term yields trade above longer-term rates a recession could follow.

Fears of a possible economic slowdown were also spurred by weaker-than-expected quarterly guidance from Toll Brothers.

The US leading builder reported its first fall in quarterly orders in more than four years, hit by rising interest rates and higher home prices.

The company's results are the latest evidence of slowing housing demand, after years of steady recovery following the housing crash a decade ago.

The US Census data showed new home sales have declined for 11 straight months.

On sectors, financials and industrials led the slide, declining 4.40 per cent and 4.35 per cent respectively.

Apple shares fell 4.40 per cent in intraday trading after HSBC downgraded the stock, citing too much dependence on a single product and slowing emerging markets economies.

HSBC downgraded Apple to hold from buy and cut its 12-month price target to $200 from $205.

Among other Dow components that plunged were Caterpillar, Boeing and Intel which declined 6.93 per cent, 4.85 per cent and 4.75 per cent respectively.