Stocks plunged Friday in Europe and the U.S. on reports that credit ratings agency Standard & Poor's has decided to downgrade the sovereign debt credit ratings of several Eurozone nations.

The Financial Times, citing unnamed sources, said France and Austria have had their AAA rating cut to AA+. Reuters and Agence France-Presse (AFP) also said France's credit rating had been cut. 

AFP, the French wire service, reported that Germany, the Netherlands and Luxembourg would not have their sovereign debt ratings downgraded by S&P.

The cloud of Europe has weighed on investors' sentiment, Keith Wirtz, who oversees $14.6 billion as chief investment officer at Fifth Third Asset Management in Cincinnati, told Bloomberg. These downgrading actions in Europe were expected down the road, not right now, he said. JPMorgan had very soft business results coming from investment banking and trading. Still, they were able to scratch out an EPS result in line with expectations. 

European stocks were plunging -- all major indexes were down more than one percent -- and the single currency tumbled to about $1.26 on the report.

The dollar shot up 1.2 percent by mid-morning against a basket of major currencies, and U.S. stocks tumbled: The Dow Jones Industrial Average and Nasdaq Composite fell 1.1 percent while the S&P 500 dropped 1.2 percent.

When news like this hits, there is always a reaction and obviously, this isn't a good one, said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York. There seems to have been some sort of a leak from S&P and whether this is real or not, who knows. But the market is selling off as a reaction, giving its some credibility.

Last month the agency cited structural financial pressures as it placed 15 of the 17 Eurozone nations on watch for a possible downgrade.