U.S. MARKET AVERAGES

Stocks turned mixed Wednesday morning, following Bernanke's first monetary policy testimony to the House Financial Services Committe. The new Fed Reserve Chairman warned of further rate hikes, saying that the economy is strong but inflation and other risks remain. He also expressed concern about Federal budget deficits.

Energy stocks generally posted strength, though the group came off its intraday high on government''s petroleum inventory report. The oil and natural gas sectors showed gains, but the oil service sector extended recent losses.

Itron (ITRI: chart) broke to a new 52-week high, rising 10% on upbeat earnings report. BlackRock (BLK: chart) pushed to another new high after it finalized its transaction with Merrill Lynch. Merrill (MER: chart) also ticked to a fresh peak. PNC Financial Services (PNC: chart), which is the majority owner of BlackRock, also jumped to a new high.

Cendant (CD: chart) added to Tuesday''s decline, expanding its 52-week low. American Pharmaceutical Partners (APPX: chart) also added to recent weakness to reach a new low.

In midday trading, the Dow Jones industrial average fell 4.72, or 0.04% after rising 136 points Tuesday. The Standard & Poor's 500 index fell 0.03, or 0%, and the Nasdaq composite index rose 4.78, or 0.21%.

Bonds were flat, with the yield on the 10-year Treasury note at 4.61%.

ECONOMIC NEWS

Crude oil inventories advanced sharply in the latest week, according to government statistics released Wednesday. The rise followed a slight dip in the previous period. Meanwhile, stocks of gasoline recorded yet another advance.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories rose by 4.9 million barrels for the week ended February 10, climbing to 325.6 million barrels from the prior week''s level of 320.7 million barrels. This followed a decline of 300,000 barrels in the previous week. Oil inventories were 10.9% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 2.2 million barrels, the government said, adding to a recent string of gains that included the previous week''s build of 4.3 million barrels. Gasoline stocks were 1.8% above their levels of last year. Inventories of distillate fuel oil advanced by 900,000 barrels in the most recent week.

Industrial production unexpectedly fell in the month of January, according to a report from the Federal Reserve, with a sharp drop in output from utilities contributing to the decrease. The report also showed that capacity utilization came in line with economist estimates.

The Federal Reserve said that industrial production fell 0.2 percent in January following an upwardly revised increase of 0.9 percent in December. The drop marked the first decrease since September and came as a surprise to economists, who had expected a 0.3 percent increase.

As mentioned above, the decrease in industrial production was largely due to a sharp drop in output from utilities, which fell 10.1 percent in January after rising by 2.8 percent in December. The Fed said that the drop in output was the result of the unseasonably warm temperatures.

The sharp drop in output from utilities offset increases in mining output and manufacturing production, which rose 1.7 percent and 0.7 percent respectively.

The Fed noted that the decrease in utilities output also contributed to a drop in the capacity utilization rate, which fell to 80.9 percent in January from 81.2 percent in December. Economists had expected the capacity utilization rate to come in at 80.9 percent.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed mostly in the red on cautiousness ahead of the inaugural public address of new U.S. Fed Reserve Chairman Ben Bernanke before the Congress today. South Korea’s Kospi was the sharpest decliner with a loss of 1.8%. The Nikkei dropped 1.6%, Singapore Straits Times fell 0.8%, while Shanghai was the only index in the positive with a gain of 0.5%.

European stocks closed mostly below the flat line, hurt by concerns about climbing costs from banks Credit Suisse and BNP Paribas. The German DAX 30 inched up 0.02%, the French CAC 40 slipped 0.55%, and London’s FTSE 100 declined 0.01%.

OIL, METALS, CURRENCIES

Crude oil prices dropped below $59 a barrel on growing crude and gasoline supplies. Light sweet crude for March delivery slipped $1.02 to $58.53 a barrel. London Brent declined 62 cents to $58.90.