U.S. stocks close lower on elevated inflation data

Meta settled a lawsuit for $12B, avoiding a larger penalty. The company will implement design changes to its platforms, including limits on teen usage and restrictions on certain features. The settlement does not require Meta to admit guilt or change its core business model.

Abercrombie & Fitch (ANF) stock surged 35% after raising its full-year profit forecast. Q2 sales rose 5% to $1.3B, with Asia-Pacific up 19%. Both Abercrombie and Hollister brands set revenue records. The company plans $500M in stock buybacks for fiscal 2026, following $282M in repurchases so far this year.

Stocks were flat ahead of Nvidia's earnings and Fed Chair Warsh's speech. PCE inflation data exceeded expectations, with the index rising 0.2% monthly and 3.7% yearly. Nike fell 2.3% to a 12-year low after a downgrade by Truist Securities. Nvidia dropped 1.6% ahead of its earnings report. Meta agreed to an $18 billion settlement over child safety concerns.

Meta agreed to pay $17 billion to settle a lawsuit by state AGs, who alleged the company designed platforms to exploit young users. Virginia will receive $353 million for initiatives to reduce social media reliance. Meta will implement new safety features for minors on Facebook and Instagram.

Bath & Body Works (BBWI) reported Q2 metrics, including 1,937 total stores (vs. 1,928 estimate) and $1.13B U.S./Canada sales (vs. $1.15B estimate). International sales grew 25.6% YoY to $108M, beating estimates.

Meta agreed to pay up to $17B to settle a case with 47 states over allegations of designing addictive platforms for children. California will receive up to $2.1B. Meta will implement changes, such as time limits and notification restrictions for underage users, if the settlement is approved. The case is among the largest against tech companies over child mental health concerns.