Investors will watch for oil news from Russia and Iraq next week, but skepticism that crude prices (search ) can stay sky-high is growing and a break in the energy market would fuel a rally in U.S. stock markets.

But volume should stay light, with investors reluctant to put money in the market ahead of the Republican National Convention, which begins in New York on Aug. 30. U.S. Attorney General John Ashcroft has said the meeting to launch President Bush's re-election bid and other summer events would be "attractive" targets for Al Qaeda.

But even as the convention looms, energy prices are still expected to be the market's primary focus. Any relief from the prices, which are nearing $50 a barrel, would send stocks higher.

"If energy prices were to break, the equity markets would strengthen quite meaningfully," said Christine Callies, managing director and chief market strategist at Bessemer Trust, with $38 billion in assets under management. "We'd see a relief rally."

Stocks have been pressed as crude oil racks up record prices on a daily basis and approaches $50 a barrel. But more stock market strategists and fund managers are questioning whether the supply and demand scenario can sustain such high prices.

"I'm skeptical of these oil prices," said Subodh Kumar, chief investment strategist, at CIBC World Markets. "I think people are making two assumptions on energy. One is that there are enough political problems globally to interrupt supply. But supply hasn't been interrupted for a long period of time.

"And two, is that global growth is going to accelerate and push up demand. But I think global growth will decelerate."

Even as U.S. oil notched a new record of $49.40 a barrel Friday, stocks ended higher. The Dow Jones industrial average was up 2.9 percent for the week, while the tech-heavy Nasdaq ended up 4.6 percent for the week. The broad Standard & Poor's 500 index finished the week up 3.2 percent.

"The oil problem is slowly being accepted," said Ralph Bloch, chief market analyst at Raymond James Associates. "Even when it hits $50 a barrel, the market may get shaken up a little bit and then the market will absorb it quickly."

Still, investors will be hungry for any news on the fate of Russia's major oil company Yukos or any news about attacks on pipelines in Iraq or other Middle East oil centers.

As the second-quarter earnings period winds down and few bellwether companies report earnings, additional attention will be focused on economic data.

"The oil, obviously, is going to be the major focus, but next there will be things coming through that offer an important read on the level of overall economic activity, like home sales and durable goods," CIBC's Kumar said.

The government will release figures on existing home sales Tuesday at 10 a.m. EDT . Analysts expect the data to show the sales of existing homes slipped to a seasonally adjusted annual pace of 6.81 million units in July from 6.95 million units in June.

On Wednesday, the Commerce Department (search ) will release data on demand for durable goods, which are big-ticket items meant to last three years or more. Orders for July are forecast to rise 1.0 percent.

The government will release revised numbers for second-quarter gross domestic product (search ) Friday. Wall Street expects the government to show the economy grew at an annual rate of 2.8 percent, below the 3.0 percent pace previously reported.

Key companies reporting earnings next week include top toy chain Toys R Us Inc. (TOY) Toys R Us reports Monday, while food company H.J. Heinz Co. (HNZ) and tax firm H&R Block Inc. (HRB ) report Tuesday.