What happened

Shares of Alphabet (GOOG 0.71%) (GOOGL 0.69%) were sliding today as several news items put pressure on the tech giant, though there was no specific news about the company.

The stock was down 4% as of 10:58 a.m. ET on Thursday, while the Nasdaq had lost 2.7%.

So what

Market sentiment was shifting back to bearishness today after both the Bank of England and European Central Bank raised interest rates by 50 basis points, following a similar move by the Federal Reserve yesterday.

Rising interest rates make it more likely that the global economy will sink into a recession, and Alphabet's business is built around ad revenue, which is sensitive to the overall economy. The company also counts the U.S. and Europe as two of its biggest markets, and higher interest rates there are likely to clamp down on business spending.

November retail sales were weaker than expected, falling 0.6% in November from October, compared to estimates of a 0.1% decline, which shows that consumer spending could also be weaker than expected. The November slide comes after retail sales jumped 1.3% in October, which could indicate that consumers took advantage of clearance sales earlier in the quarter.

And Jefferies issued a note saying that Street estimates are "overly optimistic" on digital advertising growth. Though its analyst James Heaney didn't update his rating on Alphabet, he did lower his revenue estimates by 3% to 7% across the board in the digital ad sector.

Now what

Alphabet stock has slumped all year as revenue growth has slowed in the face of macroeconomic headwinds. Its advertising business is highly cyclical, and demand adjusts quickly according to the strength of the economy, as the company has seen previously in the 2008-09 financial crisis and during the pandemic lockdown.

The interest rate hikes and weak retail sales report make it more likely that the economy will enter a sustained recession next year, which is a clear negative for the FAANG stock, especially when revenue growth is already decelerating.