NEW YORK (CNNMoney.com) - Investors will be closely watching Federal Reserve Chairman Ben Bernanke's testimony before a congressional committee Thursday for clues about the future of interest rates and the state of the U.S. economy.

U.S. stock futures were down in early trading, indicating a lower open for American markets. Futures took a hit after Exxon Mobil (Research) reported improved first quarter earnings that fell short of Wall Street forecasts. Shares of the Dow component fell 2.2 percent in pre-market trading on Inet following the report.

But even before the Exxon Mobil results, futures were pointing lower ahead of Bernanke's testimony before the Joint Economic Committee, due to start at 10 a.m. ET. Recent economic reports have suggested strong economic growth despite rising energy prices, although Thursday the report on initial jobless claims for last week came in at 315,000, up from 304,000 a week earlier and 10,000 higher than forecasts,

Investors and economists are in agreement that another quarter-percentage point rate hike at the Fed's May 10 meeting is virtually certain. There is far more debate over whether the Fed will continue its rate hikes at the June 28-29 meeting, or if the Fed will leave rates unchanged for the first time since May 2004. Minutes of the Fed's March meeting suggested the Fed policymakers are close to the end of tightening process.

David Kelly, economic advisor to Putnam Investments, said that if Bernanke's remarks emphasize earlier statements that the Fed will focus on economic data to decide whether to continue to raise rates, that could hit both stocks and bonds because it would suggest the Fed will raise rates further after the May meeting. But a more bearish view of the economy could be more bullish for stocks and bonds.

"Recent numbers have shown the economy is pretty strong and inflation prone," he said. "If he focuses on expectations that inflation won't get out of hand and the economy will slow down, the markets will be pretty happy."

China's central bank surprised market observers Thursday as it raised interest rates for the first time since October 2004 in an effort to cool its rapidly expanding economy. The country's central bank, the People's Bank of China, upped its one-year lending rate to 5.85 percent from 5.58 percent. The move will take effect Friday.

Oil prices were lower in early trading, continuing Wednesday's sell-off that followed an government report showing less of a drop in fuel inventories than had been expected.

The June light crude futures contract for NYMEX lost 66 cents to $71.27 in electronic trading, while the June contract for Brent crude edged 84 cents lower to $71.25.

Major markets in Asia closed higher Thursday on strong earnings news, though after the close of the markets there entertainment and electronics conglomerate Sony (Research) posted a wider loss than a year earlier. Major European markets were lower in early trading.

Treasury prices were lower, lifting the yield on the benchmark 10-year note to 5.12 percent from the 5.10 level reached late Wednesday. The dollar was lower against the yen but it gained against the euro.

After the bell Thursday Microsoft (Research) is set to report results, with analysts looking for the company's guidance for fiscal 2007 results for the software provider. Shares of Microsoft were down about 0.3 percent in Frankfurt trading.

The New York Times reported that top executives from the nation's Big Three automakers will meet with President Bush May 18 to discuss energy and pension issues. All three face severe competitive problems with Asian automakers due to much higher retiree health care costs, with General Motors (Research) and Ford Motor (Research) seeing losses in their core North American auto operations due greatly to those costs. Those companies and DaimlerChrysler's (Research) Chrysler unit also depend much more than their Japanese competitors for sales of less fuel efficient light trucks such as SUVs and large pickups.

McClatchy (Research) agreed late Wednesday to sell four papers, including some currently owned by Knight Ridder, for $1 billion, in a deal that will close after McClatchy completes its purchase of Knight Ridder.

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