A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City
A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., September 13, 2022.

Wall Street's main indexes were set for a lower open on Friday as investors fretted over the prospect of an economic downturn and a hit to corporate earnings from the U.S. Federal Reserve's aggressive policy tightening moves to quell price pressures.

The U.S. central bank raised rates by a widely expected 75 basis points on Wednesday and signaled a longer trajectory for policy rates, dashing hopes that the Fed expects to get inflation under control in the near term.

"While we are headed towards lower inflation and economic slowdown, it probably isn't falling off a cliff ... to some extent that's not going to be seen as good news by investors, who want to try and make it through this transition period as quickly as possible," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

"There is very little positive news right now and it could lead to a sort of a final selloff ... it's certainly possible that we could be approaching the near-term lows."

The Dow is 1.43% away from its mid-June lows, with futures suggesting the blue-chip index might retest that level, its weakest point for the year, if losses extend after market open.

The S&P 500 and the Nasdaq indexes are already in bear market and down more than 21% and 29%, respectively, so far this year, amid worries about a host of issues including the Ukraine conflict and tightening financial conditions across the globe.

Dire outlooks from a handful of companies - most recently FedEx Corp and Ford Motor Co - have also added to woes in a seasonally weak period for markets.

At 8:26 a.m. ET, Dow e-minis were down 336 points, or 1.11%, S&P 500 e-minis were down 44.75 points, or 1.19%, and Nasdaq 100 e-minis were down 141 points, or 1.22%.

All the three major indexes closed lower for the third straight session on Thursday, and are tracking sharp weekly losses on fears that the Fed's hawkish move could tip the U.S. economy into a recession.

"The likelihood of a U.S. recession in 2023 is increasing given the hawkish Fed. While it is widely understood that earnings estimates are too high given such recession risk, the market is unlikely to be able to look through falling earnings," Citigroup said in a note.

Goldman Sachs cut its year-end 2022 target for the benchmark S&P 500 index by about 16% to 3,600 points, a 4.2% decline from current levels.

Technology and growth stocks were among the biggest decliners in premarket trading, with megacap names including Alphabet Inc, Apple Inc, Amazon.com, Microsoft Corp and Tesla Inc all down more than 1% as benchmark Treasury yields were at an 11-year high.

Morgan Stanley dipped 1.8% to lead losses among the big banks.

Costco Wholesale Corp shed 2.2% after the big-box retailer reported a fall in its fourth-quarter profit margins, while battling higher freight and labor costs on rising inflationary pressure and global supply chain snags.

The CBOE volatility index, also known as Wall Street's fear gauge, rose to 28.72 points.

Meanwhile, Fed Chair Jerome Powell is set to give opening remarks on the transition to the post-pandemic economy at an event at 2 p.m. ET.

On the data front, investors will closely monitor flash reading on business activity data from S&P Global at 09:45 am ET.

A Wall Street sign is pictured outside the New York Stock Exchange in New York
A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021.