Evening digest: Meta's chils safety trial begins, oil surges

Meta shares fell as investors weighed a major child safety trial alongside higher oil prices and Treasury yields, while geopolitical tensions continued to shape broader markets.

Gold prices declined as rising bond yields increased the pressure on non-interest-bearing bullion.

Oil prices climbed for a third straight session as Iran said the Strait of Hormuz would remain closed and prospects for a US-Iran deal weakened.

Bitcoin, meanwhile, rose to $65,000 even as investors monitored elevated Treasury yields and geopolitical risks.

Meta’s child safety trial adds fresh risk for investors

Meta shares fell about 4% on Tuesday as technology stocks came under pressure from higher oil prices and Treasury yields, while investors focused on a major child safety trial in Oakland, California.

The case involves allegations from several states that Meta deliberately designed Facebook and Instagram to be addictive to young users and violated child privacy and consumer protection laws.

Meta has denied the allegations.

Four states — Colorado, Kentucky, California and New Jersey — were scheduled to appear in court as part of litigation stemming from a broader 2023 lawsuit involving 29 states.

The states are seeking changes to Facebook and Instagram, including restrictions on features such as infinite scrolling and like counts, as well as age restrictions and other measures.

The potential financial exposure is significant.

Meta has said penalties could reach as much as $1.4 trillion. The four states have indicated they could seek damages approaching $200 billion for consumer protection violations, according to a court filing cited by the New York Times.

The trial comes as Meta continues to spend heavily on AI infrastructure. The company incurred $2.4 billion in legal fees during its latest quarter, contributing to an unusual decline in profit.

Meta shares have fallen about 16% this year, with investors already concerned about the scale of its AI spending and its impact on cash flow.

Oil prices rise as Hormuz tensions persist

Oil prices extended their gains as tensions between the US and Iran raised concerns about supplies through the Strait of Hormuz.

Brent crude futures rose 0.13% to $90.99 a barrel, while West Texas Intermediate futures gained 0.59% to $85.00.

Both contracts had reached three-week highs earlier in the session.

Iranian negotiator Mohammad Baqer Qalibaf said Iran would keep the Strait of Hormuz closed until the US meets conditions of an interim agreement signed in June.

President Donald Trump said talks with Tehran were neither taking place nor scheduled, although he said the waterway was open.

Tracy Shuchart, senior economist at NinjaTrader, said the latest developments represented “headline fatigue,” arguing that the physical situation had not materially changed.

Mohit Kumar, an economist at Jefferies, said the US and Iran had not yet reached the point where either side would want to make a deal, suggesting further near-term pressure on oil prices.

Some oil continues to move through Hormuz, while Saudi Aramco has resumed some loadings and is offering cargoes through ship-to-ship transfers off Fujairah in the UAE.

Gold falls as Treasury yields climb

Gold prices declined as Treasury yields climbed and higher energy prices renewed inflation concerns.

Spot gold fell 1.6% to $4,343.77 an ounce, while US gold futures settled 1.65% lower at $4,399.80.

Peter Grant, vice president and senior metals strategist at Zaner Metals, said the steepening yield curve was a headwind for gold, while firmer oil prices were also contributing to the weakness.

Grant nevertheless said he remained bullish on gold and expected further upside after a period of consolidation.

Investors are now awaiting the Federal Reserve's latest meeting minutes for clues about the central bank's interest-rate outlook. Higher borrowing costs can weigh on gold because the metal does not generate interest income.

Bitcoin dips after touching $65,000

Bitcoin climbed to $65,000 on Tuesday, diverging from the pressure facing some traditional risk assets. BTC was trading at $64,609 at the time of writing.

TradingView data showed BTC building on gains as the S&P 500 rebounded from its recent low.

At the same time, the US 30-year Treasury yield reached 5.34%, its highest level since January 2007.

Analyst Aksel Kibar said Bitcoin was approaching a key test around $62,300 based on a potential reverse head-and-shoulders pattern.

He identified $53,000 as a possible downside target if the structure fails and $76,000 as a potential upside target if the rebound holds.

Bitcoin's recovery also faces resistance near $65,827, identified as the current level of its 50-month exponential moving average.