What happened

Shares of Costco Wholesale (COST -0.15%) were falling today in response to a weak retail sales report this morning and as the broad market reacted to the Federal Reserve interest rate hike yesterday, as well as rate hikes from the Bank of England and the European Central Bank this morning.

Though there was no company-specific news on Costco today, the larger news items add to fears about a global recession next year as central banks continue to raise rates to reel in inflation and slow down economic growth.

As of 12:42 p.m. ET, Costco stock was down 3.7% on the news, while the S&P 500 had lost 2.5%.

So what

Of all of those news items, the slowing retail sales report may be the most troubling for Costco. Though the company reports monthly sales and has already given investors an update for November, the numbers out of the Census Bureau show that consumer spending could be slowing faster than expected.

Overall retail sales fell 0.6% from October to November, worse than analyst projections of a 0.1% decline. Electronics, appliances, and home furnishings were particularly weak, and sales at general merchandise stores were down 0.1% in the month.

Grocery sales remained strong, up 0.8%, a good sign for Costco, as it makes most of its revenue from groceries, but discretionary items like electronics and apparel tend to offer higher margins.

The pullback in national retail sales also comes after October retail sales jumped 1.3%, showing consumers may have taken advantage of earlier sales to clear inventory.

Costco's stock fell earlier this month when it reported its own disappointing results for November, saying that comparable sales adjusted for fuel and currency exchange rose 5.3%, slower than in previous months. That, combined with the November retail sales report, seems to indicate a slowdown in consumer spending.

Now what

Costco is generally regarded as a recession-proof stock, as most of its profits come from membership income and members are incentivized by its bargain prices. 

However, the stock is richly priced these days at a price-to-earnings ratio of 35, and investors seem to fear that comparable sales growth will continue to slow based on the interest rate hikes and other macro headwinds in the economy.