Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) and Royal Caribbean Cruises Ltd (NYSE:RCL) shares are trading lower by 3.4% to $16.34 and 1.4% to $93.03, respectively, Friday afternoon.

Shares of several consumer discretionary companies are volatile this week with concerns about future rate hikes following Wednesday's FOMC statement and lower-than-expected initial jobless claims data.

Cruise line companies rely on borrowing to finance its operations and fleet expansion. If the Federal Reserve signals future interest rate hikes, it implies that the cost of borrowing for the company may increase. Higher interest expenses can eat into profitability, potentially leading to a drop in stock prices.

The cruise industry also heavily depends on consumer discretionary spending. If interest rates rise, it can lead to higher interest payments on credit card debt and other loans for consumers, which might reduce their willingness to spend on non-essential items like cruises.

What's Going On?

The Federal Reserve maintained the federal funds rate within the 5.25% to 5.5% range at its September meeting in a unanimous move.

The September dot plot reveals the median preference for the fed funds rate at the close of 2023 remains unwavering at 5.6%. This figure mirrors projections made back in June, hinting at the possibility of one more rate hike during either of the last two meetings this year...Read More

According to data from Benzinga Pro: 

• NCLH has a 52-week high of $22.75 and a 52-week low of $10.83
• RCL has a 52-week high of $112.95 and a 52-week low of $36.92