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 Investors will be eager to learn whether Bernanke, in an appearance before Congress, gives any indication whether the Fed is more concerned about the slowing economy or the rising risk of inflation.
Recent data reports show the economy already may be facing the dual challenges. If so, this is a worst-case scenario for the Fed, which will have to choose whether to keep cutting rates to stimulate the economy, or halt rate reductions to cool off inflation.
Overnight in Europe, the euro broke above the key $1.50 level for the first time. Analysts attributed the new record for the eurozone currency to mounting investor conviction that the U.S. is indeed beset with both inflation and an economic slowdown.
The dollar weakness helped propel gold futures to a new high in London trade. In electronic trading gold futures traded as high as $961.30 an ounce.
The futures contract for the Dow Jones industrial average fell 19 points, or 0.2 percent, to 12,680. Futures contracts for the Standard & Poor's 500 dropped 3.50, or 0.3 percent, to 1,379.30 as the Nasdaq 100 futures gave up 4.5 points, or 0.3 percent, to 1,792.2.
Wall Street rallied Tuesday after IBM approved a $15 billion stock buyback, suggesting to investors that there are still some companies out there with financial muscle. The Dow Jones industrial average rose more than 110 points. Broader indexes rallied too.
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 Treasurys rose in early trade, pushing yields down. The yield on the benchmark 10-year note fell to 3.83 percent from 3.86 percent last Tuesday. Oil futures also advanced, rising 36 cents to $101.24 a barrel in preopening trading on the New York Mercantile Exchange.
Nortel Networks announced a hefty $844 million quarterly loss and said it will cut 2,100 jobs in an effort to contain costs. And home builder Toll Brothers said it had a quarterly loss of $96 million but also faulted "excessive talk" about recession for frightening consumers away from the housing market.
The session will see the release of reports on durable goods orders and new home sales. According to surveys of analysts by Thomson/IFR, orders for durable goods should have fallen 1.7 percent in January after rising 5.2 percent in December. However, excluding transportation orders, last month's decline is expected to be just 0.6 percent.
New home sales are expected to have continued to dwindle at the start of the year. Thomson/IFR forecasts that just 600,000 new homes were sold last month, down from 604,000 in December.
In Tokyo, the Nikkei closed 1.49 percent higher. But there were losses on European bourses, as London's FTSE 100 fell 0.65 percent, Paris' CAC 40 gave up 0.60 percent and Frankfurt's DAX lost 0.29 percent.
[Associated Press; By LESLIE WINES]
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