• Stocks: Markets meandered all afternoon as everyone awaited Nvidia’s earnings, due after the bell.
• Commodities: Oil bounced around recent lows on the news that Iran and Oman have agreed to establish a temporary route for ships to safely travel through the Strait of Hormuz.
• Economy: The July PCE report revealed that inflation rose 3.7% annually, slightly above economists’ expectations. Core inflation, which cuts out volatile food and fuel prices, rose to 3.3%, which was in line with forecasts.

Lawsuits

Illustration: Morning Brew Inc., Photo: Adobe Stock

For once, we’re writing about tech news that has nothing to do with AI. Today, Meta agreed to pay up to $18 billion in a proposed settlement with 48 state attorneys general, wrapping up a major trial over whether the company’s technology was harmful to children.

In response to the verdict, Meta will have to make a slew of changes to its platforms:

• The company will implement a two-hour cap for underaged kids using Facebook and Instagram, and a chronological feed instead of a virality-optimized algorithm.
• “Night mode” will block underaged users from the platforms between 12am and 6am, and stricter “enhanced age assurance measures” will prevent younger children from getting access to the platforms.
• Meta also agreed to appoint an independent auditor to monitor compliance.

Wait, what?

In a frankly confusing agreement, Meta will pay out only 70% of the settlement unless TikTok and YouTube (owned by Alphabet) also agree to set one-hour limits for users under 18, and each pay the states associated with the lawsuit $5.3 billion. Meta will only have to pay the last 30% of the settlement if the other two companies consent to the terms.

The agreement still has to be approved by a judge, and a settlement amount will be distributed to the states in installments over a decade.

Meta shareholders brush it off

Even while the settlement forces Meta to make some significant changes, shareholders seemed more relieved by the certainty of settlement than afraid of unforeseen consequences. After all, while that $18 billion deal is no small sum, it pales in comparison to the $1.4 trillion in damages that the states were trying to force Meta to pay. That’s why shares of Meta actually climbed 1.07% today.

A long road ahead: This settlement doesn’t wipe out the thousands of other cases being brought nationwide against Meta and other social platforms by school districts, state attorneys general, and teens themselves. For investors, this is less of a resounding victory, and more like the first step in a relentless slog of accusations and bad PR.—LB

      

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Stocks

🟢 What’s up

• J.M. Smucker gained 4.26% on fiscal first-quarter revenue that topped Wall Street expectations.
• SolarEdge Technologies jumped 10.71% following a UBS upgrade, which cited a policy change that could help the company gain market share and raise prices.
• Semtech surged 10.41% on record quarterly revenue, fueled by growing demand from AI data centers and connected devices.
• Biohaven climbed 17.87% after licensing an experimental epilepsy treatment to SK Biopharmaceuticals in a global deal.
• Revolution Medicines gained 1.92% on earlier-than-expected regulatory approval for its pancreatic cancer pill.

🔴 What’s down

• SAP dropped 2.42% on a UBS downgrade that flagged the company’s slow rollout of AI agents to customers.
• Zoom Communications slipped 7.03% following a third-quarter forecast that missed Wall Street expectations.
• Intuit declined 3.24% on a disappointing fiscal 2027 outlook.
• Spyre Therapeutics tumbled 12.81% after scrapping plans to develop one of its experimental drugs as a standalone treatment for rheumatoid arthritis.
• Snap sank 8.45% after Pennsylvania sued the company, alleging Snapchat’s design encourages addictive use among minors and puts children at risk.

Call of the day

The bots are breaking in

Illustration: Morning Brew Inc., Photo: Adobe Stock

AI isn’t just helping us whip up fake fat-cat photos or instant college dissertations. It’s also arming cybercriminals with new ways to come after companies, governments, and pretty much everyone in between.

The latest victim is Boston Scientific, which got hit with a cyberattack that’s disrupting shipments of everything from pacemakers to stents. So far, there’s no word on when services will be restored, per the SEC filing. Shares tanked tk% on the news.

Meanwhile, the US just took down a Chinese hacking operation responsible for break-ins at the Federal Reserve, US Senate, and other government agencies you probably hoped were unhackable. Oh, and OpenAI just released a breakdown of how its models broke containment and hacked the open-source software developer platform Hugging Face.

So, does a rising tide of AI-powered cyberwarfare sink or lift cybersecurity stocks? Analysts at Bank of America seem bullish: They recently raised their price targets on three firms (SentinelOne, Zscaler, and SailPoint) and tweaked their CrowdStrike estimates ahead of today’s earnings. SentinelOne shares have climbed over 35% in 2026, while CrowdStrike is up about 62%—but SailPoint is down 11%, and Zscaler has tumbled 25%. BofA says the latter two are cloud-based companies that were hit hard by AI fears, but could prove to be long-term winners as companies’ cybersecurity needs continue to rise.

“While the market initially viewed AI as a potentially disruptive force that could compress the value of incumbent security platforms, recent developments have shiſted the conversation toward the expanding threat landscape created by AI,” the analysts explained.

In other words: Investors used to worry that AI would make cybersecurity services obsolete and put these firms out of business. But if AI bots are the ones breaking in, that means we still need actual humans to save the day.—JD

Earnings

Illustration: Morning Brew Inc., Photos: Adobe Stock

Abercrombie & Fitch has had its share of bad PR lately. Fortunately for investors, the company delivered some good news today: Abercrombie shares surged 35.67% after the retailer blew past quarterly expectations and raised its full-year guidance:

• Adjusted earnings came in at $4.17 a share, more than double Wall Street’s $1.99 estimate.
• Net sales rose 5% to a record $1.27 billion, marking the company’s 15th consecutive quarter of growth.
• Tariff refunds added $1.75 a share to quarterly profit

Increased momentum in the Americas, along with improving trends across Europe, the Middle East, and Africa, helped both Abercrombie and Hollister post record sales. Same-store sales at the Abercrombie brand rose 4%, though Hollister comps fell 3%.

A sneaker slump

The rally comes just one day after fellow retailer Dick’s Sporting Goods went in the opposite direction. Shares plunged 31% for its worst day on record after missing earnings expectations and slashing its full-year outlook. Most of the weakness came from Foot Locker, which Dick’s acquired last year for $2.4 billion: Dick’s core comparable sales rose 4.9%, while Foot Locker comps fell 3.6%.

Executives say the footwear industry is dealing with a “hangover,” as brands like Nike, On, and Hoka reset their product lineups and clear out older styles with heavier discounts. Those markdowns help move product, but they also squeeze margins. Dick’s now expects Foot Locker to lose $40 million to $80 million this year, versus its prior forecast for a $110 million to $150 million profit.

A choosier consumer

Abercrombie and Dick’s are two pieces of the same puzzle: Consumers are still spending, but stubborn inflation has forced them to become much more selective about where their money goes. It’s no coincidence that as PCE came in slightly hotter than expected in July, inflation-adjusted consumer spending was flat after rising 0.4% in June.

For retailers, that means the winners may not be the companies with the most stores or the biggest brands, but the ones that can figure out what increasingly picky consumers actually want. So don’t dismiss those unemployed TikTok lurkers devoting half their waking hours to the internet’s latest microtrend—they may have exactly what retailers need: taste.—SY

      

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News

• Here’s what to expect at Apple’s first iPhone launch under CEO John Ternus.
• Silicon Valley is infatuated with this new AI assistant startup.
• The Paramount acquisition of Warner Bros. Discovery is still stuck in limbo—here’s what that actually means.
• Wall Street banks are looking to roll out stablecoins…with their tails between their legs.
• Vanguard bought wealth management company Altruist for $4 billion.
• Bill Gates had some stark warnings about how AI could widen inequality and disrupt the economy.

Calendar

Economic reports: All we’ve got is the usual weekly initial jobless claims report.

Earnings announcements: Marvell, TD Bank, Autodesk, Workday, Affirm, Dollar Tree, and Best Buy begin the end of the earnings season.

Everything else: All eyes turn to the Grand Tetons, where the Jackson Hole Economic Policy Symposium begins and runs through Saturday. Fed Chair Kevin Warsh will be under the microscope, though his speech isn’t scheduled until Friday.

recs

🧠 Follow the smart money: Here are the 10 stocks that top fund managers have been buying recently.

🫤 Want to get started investing, but don’t have much money? That’s okay: Here are some investing tips for beginners who are starting from scratch.

📈 Treasury yields look pretty tempting, but these seven dividend stocks pay even more—and have solid earnings potential.

🤖 Is AI getting better at investing? The math says human investors still have a fighting chance.

🇺🇲 Everything’s expensive these days—unless you live in Mississippi. Here’s how much income a family of two adults and two children needs to live comfortably in every US state.

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🔪 Readers’ most-clicked story was about how you should never try to catch a falling knife. Instead, it’s far better to buy stocks at record highs than sit around waiting for the next crash.