What happened

Shares of Carnival (CCL 0.67%), Canopy Growth (CGC -1.36%), and Carvana (CVNA -0.36%) -- as well as many stocks not starting with the letter "C" -- dropped in early afternoon trading Friday. As of 1:10 p.m. ET, Carnival stock's down 3.2%, Canopy 3.5%, and Carvana a jaw-dropping 12%.

The implosion of Silicon Valley Bank, and the sell-off among banks in general, is part of the reason stock market investors are spooked today. The reason why Carnival, Canopy, and Carvana, however, are dropping, can be traced to a more proximate cause: interest rates are probably heading higher.

So what

As you've probably heard by now, there are two big macroeconomic stories in the news today. SVB Financial's meltdown is one. The other is jobs, and specifically, the Department or Labor's announcement that in February, non-farm jobs grew by 311,000 in the U.S. 

In contrast to the first story, that second one actually sounds like good news, except for one thing. Specifically, market watchers were only expecting payrolls to rise by 225,000 last month. The fact that job gains were significantly higher than that, therefore, suggests the U.S. economy is still growing rapidly, and this could potentially mean that inflation will remain higher than the economy watchers at the Federal Reserve would like.

To forestall that, and continue working to drive down inflation, the Fed is now more likely (than it was before the strong jobs report came out) to announce a 50-basis-point hike in target interest rates when it meets again next week. Up until about a week ago, the hope among investors was that the Fed would announce only a 25-basis-point hike on Wednesday (to a 5% targeted interest rate).

Now, it's about a 50-50 chance that the hike will push interest rates to 5.25% on Wednesday.  

Now what

It gets worse. On Bloomberg this morning, former Treasury Secretary Lawrence Summers argued there's also a 50-50 chance the Fed won't stop raising interest rates next week, but keep on hiking to 6% or more.  

Granted, even if he's right about that, we still have probably several months more before interest rates get that high. But sooner or later, if they do get that high, it's going to pose a problem for companies carrying large debt loads -- because the interest they pay on their debts will rise in tandem with interest rate hikes. And I'll give you three guesses which companies (that begin with the letter "C") might need to worry about that.

You guessed it -- Canopy Growth, which is carrying $523 million more debt than cash on its balance sheet at present (and which has no profits with which to pay down that debt). Carvana has a $8.1 billion net debt load (and likewise has no profits). And last but not least, Carnival Corporation is low in the water under almost $32 billion in net debt.

Carnival, by the way, hasn't earned a profit since 2019 -- the year before the pandemic hit. Analysts had been hoping a rebound in the tourism industry would help lift Carnival back to profitability this year. At last report there was still hope the company might get at least one profitable quarter (in the seasonally strong summer months). But if interest rates keep rising -- as it now seems they will -- that hope, too, could fade. It's now starting to look like Carnival investors will need to wait until at least 2024 to see their first post-pandemic full-year profit. And according to data from S&P Global Market Intelligence, Carvana and Canopy investors won't see a profit before 2027 at the earliest.

Can you really blame the investors selling Carnival, Carvana, and Canopy Growth stocks today if they don't want to wait around that long?