North American stocks may open flat Wednesday as investors await Federal Reserve Chairman Ben Bernanke’s testimony to the U.S. Congress.

In this morning’s economic news, the U.S. Labor Department said the June consumer price index increased by 0.2%, after climbing 0.4% in May. The core CPI, which excludes food and energy items, grew 0.3% in June for the fourth consecutive month at that pace. The core increase was just above Wall Street expectations of a 0.2% rise, while the overall CPI number was in line with expectations.

The year-over-year change in the core CPI was 2.6%, the highest since 2002. This increase may mean the Fed will be more likely to raise interest rates again in August.

Separately, the U.S. Commerce Department said June housing starts decreased by 5.3% to a seasonally adjusted 1.850 million annual rate. Economists forecast a 3.4% decline in housing starts to a 1.890 million annual rate.

Later today Fed chief Bernanke gives testimony about the state of the U.S. economy and possible clues about what the central bank will do at its policy meeting next month. The Fed has raised short-term interest rates by 25 basis points at each of its past 17 meetings.

Here at home, Statistics Canada reported that the composite index rose by 0.2% in June, after an upward-revised gain of 0.4% in May. The estimate for March was also revised up, to a 0.6% increase.

The government agency said consumer spending remained the bedrock of growth, while the weakness in manufacturing was less pronounced.

Housing and the stock market were the weakest components, after leading growth early in 2006.


In today’s earnings news, Inco Ltd., in the middle of several takeover battles, is reporting a company record profit of US$472 million for the second quarter, compared with a year-earlier $220 million.

J.P. Morgan Chase said its second-quarter net income more than tripled amid strong growth throughout the company’s businesses. The nation’s third-largest bank said revenue rose 15% to US$15.72 billion.

Bank of America’s net income rose 18% in the second quarter, as trading and investment banking bolstered earnings, with an able assist from credit-card income. The bank’s revenue rose 25% to US$18.23 billion.

After Tuesday’s close Yahoo reported that it’s second-quarter profit fell nearly 80%, and the Internet company said it will delay the release of much-anticipated improvements to its search advertisement systems.

International Business Machines posted an 11% gain in net income on an increase in software sales, but a sharp drop in contract signings in its critical services arm.

In today’s M&A news, Swiss-based Xstrata said it has raised its offer for Canada’s Falconbridge Ltd. to $63.25 a share from $59.

Crude-oil prices were unchanged at US$73.54 a barrel Wednesday as traders took profits from recent price spikes inspired by fighting in the Middle East. A weekly report on U.S. energy inventories is due later.

The Canadian dollar opened at US87.8¢, down 0.19 of a cent.

Overseas, the Nikkei 225 in Tokyo rose 63.02 points, or 0.43%, to close at 14,500.26 after falling 7.2% in the previous five sessions.

In Hong Kong, the Hang Seng Index rose 53.60 points, or 0.3%, to 16,097.54 in lacklustre trading.

In Europe, the United Kingdom FTSE 100 and German DAX 30 saw modest increases.

Toronto stocks dipped slightly Tuesday, following a triple-digit loss in the previous session, as declines in commodities were offset by gains in the technology groups.

The S&P/TSX composite index fell 8.93 points, or 0.08, to 11,471.69.

Nortel Networks and Microsoft announced an alliance that would combine Nortel’s IP network expertise with Microsoft software to consolidate communications functions for users. Nortel gained 15¢, or 6.76%, to $2.37 on the news.

The S&P/TSX Venture composite index gave up 47.63 points, or 1.86%, to 2,509.10.

In New York, ended modestly higher, bolstered mostly by good corporate earnings, but tempered by geopolitical concerns.

The Dow Jones industrial average closed up 51.87 points at 10,799.23, after a hitting a low of 10,683.32 in early trading. The Nasdaq composite index rose 5.51 points to 2,043.23, while the S&P 500 ended up 2.37 points at 1,236.86.