Why Etsy Stock Fell Nearly 3% Today and Is Down 6% So Far This Week

Shares of e-commerce site Etsy (NASDAQ: ETSY) were down 2.8% today as of 3:45 p.m. ET. By contrast, the S&P 500 was down 0.3%, and the Nasdaq Composite was flat. What gives?

Etsy's woes this week are likely two-fold. First up: Inflation. The U.S. Bureau of Labor Statistics showed that the Consumer Price Index (CPI) was up 9.1% in June, a slightly higher rate than expected. With inflation still running hot, the U.S. Federal Reserve is likely to deliver another steep interest rate hike late in July. Higher rates lower the value of risk assets like stocks, shares of Etsy included.

And second: Consumer sentiment. The health of the consumer is being increasingly linked to inflation. As the prices of basics like food and gasoline soar, households are beginning to cut spending on more discretionary items. Granted, the U.S. Census Bureau's latest retail sales report on May showed purchases on some of Etsy's top categories like clothes and home goods were holding up. However, the economic situation is changing quickly, so worries are mounting that Etsy could be in for more than just a slowdown in revenue growth.

Source Fool.com