• Markets: Stocks did their best pancake impression yesterday, closing mostly flat, with investors bracing for Nvidia’s earnings after the bell (more on that below) and digesting the news that the Fed’s favorite inflation gauge showed sticky inflation in July.
• Stock spotlight: Yesterday was a good day for mall lovers: Abercrombie & Fitch raised its outlook for the year as it reported rising profits and sales. That gave the chain even more of a boost than a teen gets at the school dance for overapplying its cologne.

MINOR ADJUSTMENTS

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Meta agreed to pay as much as $18 billion to settle a federal lawsuit brought by California and other states that accused the company of using practices intentionally designed to keep children addicted to its platforms and of collecting data from children under the age of 13 without parental consent.

“As much as” means that Meta will pay the 47 states involved in the settlement $12.7 billion over the next 10 years. Meta will only pay the remaining $5.3 billion if its rivals TikTok and Google’s YouTube also implement similar safeguards to the ones Meta agreed to as part of its deal to resolve the suit—and kick in a matching $5.3 billion of their own. Meta did not admit wrongdoing as part of the settlement.

Here are some of the Facebook and Instagram changes Meta agreed to make:

• Time limit: Users aged 13 to 17 will only get two hours per day for brainrot on its platforms.
• Night mode: Teens will be blocked from the apps between midnight and 6am.
• School mode: There’ll be no push notifications for teen users during school hours of 8am to 3pm.

Meta will also hide likes and reactions from minors on posts by default and block “extreme makeup filters,” although adults will still be able to yassify themselves and their pets.

The impact on Meta’s business

Fewer kids spending time on Instagram looking at reposted MrBeast content at 3am could impact Meta’s ad business. Yesterday, the company said it expects to “accrue a legal expense of approximately $10 billion in the third quarter of 2026 related to the agreement.”

But the deal takes away the existential threat Meta was facing from the trial, as the states were seeking up to $1.4 trillion, which is close to Meta’s whole market cap.

Investor reaction: Meta shares had an up-and-down day yesterday, but ultimately finished slightly up when the market closed.

There’s still litigation to come…Florida’s attorney general, James Uthmeier, is not part of this deal and has sued the company separately. Meta is also facing other lawsuits from individuals and school districts. Meta plans on fighting those cases, saying it sees them as weaker than the one it settled yesterday, according to the Washington Post.—DL

      

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