Wall Street hit by late sell-off following S&P warning

The Dow Jones shed 75 points in late trading as speculation mounted Standard & Poor’s was lining up potential downgrades for 15 of the 17 members of the eurozone.

The index was trading 150 points up in the morning session but slipped down to close just 78 points up or 0.65% to 12,097. Investor sentiment was badly hit as news leaked S&P was set to deliver a dire warning to eurozone countries.

As the market closed, the rating's agency confirmed the rumours were true and warned all the eurozone members of potential credit rating downgrades if politicians do not thrash out a concentrate plan to resolve the debt crisis.

The Dow Jones was lifted in the morning session following Germany and France agreeing closer fiscal union in a deal which leaders hope could save the euro.

The S&P 500 index gained 1.03% or 12 points to 1,257.08, while the Nasdaq Composite Index rose 1.1% or 29 points to 2,655.76.

Meanwhile, overnight in Asia the Nikkei dropped 1.4% to 8,575.16, with market optimism dampened after S&P's warning.

The futures market is indicating the FTSE 100 will open around 0.5% lower this morning.