Traders work on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. AP
The key S&P 500 index is down almost 20 percent over the past year, marking its worst showing since 2008 as global equity markets pulled back on central bank rate hikes.
This has raised fears of a recession, with the Federal Reserve vowing to stay the course on curbing inflation until the job is done.
Shortly after trading began on Friday, the Dow Jones Industrial Average lost 0.6 percent to 33,027.98.
The broad-based S&P 500 shed 0.8 percent to 3,819.05, while the tech-rich Nasdaq Composite Index slumped 1.2 percent to 10,356.07.
"Global growth slowed sharply through 2022," said Stephen Innes, managing partner at SPI Asset Management in a note.
This came on the back of policy tightening, China's protracted Covid-19 restrictions, and an energy supply shock from Russia's invasion of Ukraine.
"And now we head into 2023 with most of Wall Street... telling investors that the global economy will grow below trend, enter a mild recession and experience a bumpy reopening in China," he said.
"These are hardly the things that stock market dreams are made of," Innes added.
But analysts expect the worst of Federal Reserve rate hikes, which have sent jitters across markets, to be over.
"I think the Fed will be successful and 2023 will feel like a more normal year," said Maris Ogg of Tower Bridge Advisors.
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