Meta's Legal Fight
Social media is nearing a turning point that looks like its "big tobacco moment." Meta (META) heads to court in California to defend against a group of 29 state attorneys general. They accuse the company of breaking federal and state laws, including the Children's Online Privacy Protection Act and several consumer protection statutes.
This case follows a loss Meta (META) took earlier this month in New Mexico. That ruling forces the company to change some services and pay nearly $1 billion. The stakes now run far higher. Legal teams on both sides estimate damages in this combined state attorneys general trial could land anywhere from $200 billion to $1.4 trillion. A guilty verdict could also force Meta (META) to fundamentally change its core algorithms.
Oil and Iran
Oil prices edged higher as tension between the US and Iran stayed high. US crude futures moved above $84 a barrel and sat just below $85, while Brent traded above $90. The move came after Iran ruled out extending a 60-day memorandum of understanding with Washington. That deal was meant to keep the Strait of Hormuz open while the two sides worked toward a broader nuclear deal. A senior Iranian official told Reuters that Tehran would shift from a defensive to an offensive posture if talks fail. That raises the risk of more disruption through the key oil choke point. Oil stays in focus for the rest of the week.
Alibaba Sells Gaming, Doubles Down on AI
Shares of Alibaba (BABA) rallied on reports it is selling its gaming unit in a deal worth $1.5 billion. Per Bloomberg, an Asian private equity firm, True Star Capital, agreed to buy it. Alibaba (BABA) is shedding non-core assets to double down on AI.
Alibaba's (BABA) open-weight AI models have passed 3 billion global downloads in 6 months, beating Meta (META) and Alphabet (GOOGL). The company reports earnings this week. The market wants profit and margin recovery, driven by conditions at home and by making money from its AI investments. This sits against a hard backdrop for China's economy. Data out today showed the economy kept losing momentum in July as domestic demand stayed weak.
US Housing Sentiment
The NAHB housing market index for July showed home builder sentiment improving from a 9-month low. The reading rose to 35, still below 50, the line between poor and good conditions. It has stayed under 50 for over 2 years. Sentiment is held down by economic and geopolitical uncertainty, high mortgage rates, and rising construction costs. A busy week of housing data lies ahead, including pending home sales and mortgage applications.
Earnings to Watch: Home Depot and Toll Brothers
Tomorrow brings earnings from Home Depot (HD) and Toll Brothers (TOL). For Home Depot (HD), Wall Street expects EPS of $4.73 on revenue of $47.25 billion, which would be about single-digit year-over-year growth for both. The key question is whether consumers still hold back on larger home improvement projects as high borrowing costs and weak affordability press on spending. Investors watch comparable sales, big-ticket demand, and the outlook for signs the consumer and housing-related spending are getting stronger.
For Toll Brothers (TOL), the expectation is about $2.93 a share on $2.62 billion in revenue, a sales drop of about 12% from a year ago. Focus falls on orders, deliveries, backlog, and margins. Investors want to know whether high mortgage rates and elevated home prices keep pressuring demand and pushing builders to offer more incentives. Most expect the data to show that.
Other Data on Deck
More releases include housing starts, pending home sales, import and export prices, and industrial production. Import and export prices matter for any inflation signal coming through inbound shipments. Manufacturing appears to be holding up based on recent economic data. None of this ranks as top-tier data, but it still matters for the bigger picture.
