Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. Reuters / BRENDAN MCDERMID

Wall Street's main indexes were set to open higher on Friday after a brutal selloff triggered by the Federal Reserve and other major central banks raising interest rates heightened recession fears.

The benchmark S&P 500 and the tech-heavy Nasdaq have plunged 6% so far this week, with the former shedding nearly $2 trillion in this week's selloff.

Stubbornly high inflation has spooked equities in recent weeks as investors adapt to the end of the era of cheap money and worry about price pressures taking a toll on corporate profits and economic growth.

The Fed on Wednesday raised its key rate by 75 basis points and officials outlined a faster pace of rate hikes. The Bank of England and the Swiss National Bank also raised borrowing costs.

"The markets will not stabilize until there is a sense that moves by the Fed and other central banks are going to be successful in not only tamping down inflation, but trying to prevent a global recession," said Kenny Polcari, managing partner at Kace Capital Advisors.

"I don't think it's another 2007 event. But based on all the stimulus that every central bank around the world has provided and now that they're starting to take the candy away from the candy jar, investors are going to react violently."

Meanwhile, Fed Chair Jerome Powell reiterated the central bank's focus on bringing back inflation to its 2% target while speaking at a conference on the "International Roles of the U.S. Dollar".

The S&P 500 has slumped about 23% this year and recently confirmed it was in bear market territory, or down 20% from its record closing high. The Dow is also on the cusp of confirming a bear market.

Trading is expected to remain volatile, also due to the expiration of monthly and quarterly options contracts ahead of the Juneteenth market holiday on Monday.

At 08:26 a.m. ET (1226 GMT), Dow e-minis were up 225 points, or 0.75%, S&P 500 e-minis were up 35.25 points, or 0.96%, and Nasdaq 100 e-minis were up 131.5 points, or 1.18%.

On Friday, megacap firms Apple Inc, and Microsoft Corp gained 1% in premarket trading after getting hammered in the previous session.

U.S. shares of Alibaba Group Holding Ltd jumped 11.4% after Reuters reported China's central bank has accepted an application by Ant Group to set up a financial holding company.

United States Steel Corp rose 6.4% after posting an upbeat second-quarter profit forecast.

Adobe Inc fell 3.6% after the software firm's third-quarter and full-year revenue forecasts fell short of Wall Street estimates.