What happened

Shares of Carvana (CVNA 2.85%) were falling again today, even though there was no company-specific news out on the online used car dealer. Instead, a stronger-than-expected jobs report sparked a sell-off as it convinced investors that the Federal Reserve was more likely to keep raising interest rates.

Carvana, which is bleeding cash and especially sensitive to interest rates, took the news worse than most. Shares were down 5.4% as of 11:15 a.m. ET today. At the same time, the Nasdaq was down 1.1%.

So what

The November jobs report from the Bureau of Labor Statistics showed jobs growth remains robust even as the Federal Reserve has rapidly cranked up interest rates in order to bring inflation down, which should impact jobs growth.

The economy added 263,000 jobs last month, above expectations at 200,000, and the unemployment rate held steady at 3.7%. Hourly wages also increased 0.6% from October, above expectations of 0.3%, showing wage growth remains strong, which could make inflation harder to tame.

In remarks on Wednesday that propelled stocks higher, Fed Chair Jerome Powell also said that wage growth and the labor shortage remain the biggest barrier to reeling in inflation. Therefore, the strong employment numbers could persuade the Fed to take a more hawkish stance, or raise rates for a longer period of time.

Now what

Higher interest rates are especially problematic for Carvana because it holds billions of dollars in variable interest rate debt, and higher interest rates will make new debt more expensive. Additionally, higher interest rates make it more expensive for shoppers to buy cars, so they may choose to delay new purchases or buy less expensive vehicles.

Carvana is already facing a cash crunch as it's burned through more than $1 billion in free cash flow in the first three quarters of the year and used car prices are still declining. Some analysts think the company could run out of cash in a year.

Against that backdrop, rising interest rates will only make a recovery harder for the struggling e-commerce stock.