Oil prices got all the headlines this week as crude futures hit a record on Wednesday, stalled and then shot to a new high Friday of $43.82 a barrel. Beneath the surface, the price action in technology suggested the market's speculative side might be feeling for a bottom. Predictably, oil giants including ExxonMobil ( XOM), ChevronTexaco ( CVX) and ConocoPhillips ( COP) reported monster second quarters, helping the S&P 500 gain 1.4% for the week and snap a six-week losing streak. Threats of a shutdown by Russia's largest oil producer, OAS Yukos, pumped up crude futures Wednesday. When that rumor fell flat Thursday, the markets ramped up again Friday on concerns that worldwide supplies can't keep up with growing demand. Away from the headlines, general fears of unrest and insecurity in Iraq and Saudi Arabia along with labor issues in Nigeria and Norway and an election in Venezuela have put steady upward pressure on oil. Higher oil prices -- which have gained 40% over the past year -- helped fill second-quarter coffers at the big three U.S. producers. Chevron shares gained 1.9% in a week that ended with the company reporting a doubling of net income. Conoco gained 1.2% on a 73% earnings increase. And ExxonMobil climbed 1.6%, with earnings up 39%. The stocks have gained an average of 37% over the past year. Less predictably, however, technology and telecommunications shares started to find their way out of the doldrums, with the Nasdaq Composite gaining 2.1% over the five sessions. The bottom could be retested next week if oil prices continue climbing and the market gets jittery over the July payroll report, which hits Friday. The threat that rising oil prices would put a damper on growth had previously kept the Nasdaq down whenever crude rallied. But the tech sector got a boost from Tuesday's report that the Conference Board's consumer confidence index rose to its highest level in two years in July, contrary to a predicted drop. It was the first piece of hard data signaling that weakening consumer demand in June wasn't the start of something ugly.
On Friday, two more reports helped back up the Conference Board reading. The University of Michigan said its revised consumer sentiment index for July rose to 96.7, above estimates of 96.2. And the National Association of Purchasing Management said its Chicago Purchasing Managers' Index rose more than expected in July, up to 64.7 from 56.4 in June. Still, tech investors will be glad to flip the pages of their calendars to August on Monday. Despite this week's gain, the Nasdaq lost almost 8% for the month, its worst performance ever in July, according to Bear Stearns. Verizon ( VZ), the nation's biggest local phone company, got things started off on the right foot for the telecom sector on Tuesday, reporting that its second-quarter net income rose to $1.8 billion from $338 million a year earlier. Investors were particularly heartened to see that losses in Verizon's local line business were being offset by gains in wireless and high-speed DSL data service. Verizon Wireless added 1.5 million new subscribers in the quarter -- three times what rivals Sprint ( FON) and Cingular reported. Verizon shares gained 9% on the week and fellow carriers SBC Communications ( SBC) and BellSouth ( BLS) rose about 5% each as well. RealMoney.com colleague Jim Cramer thinks the Baby Bells have reached a
turning point with regulators giving up on rules that forced the companies to lease lines to competitors at wholesale discounts. He calls it the "brightest story out there." It's less good news for the mother ship, AT&T ( T), which saw Moody's slash its bond rating to junk status. AT&T said last week that thanks to the loss of discounts and plummeting revenues it was pulling out of the residential market. Nonetheless, shares of Ma Bell may have bottomed. They gained 6.5% on the week, The bullish consensus isn't unanimous. Patrick Brogan and Scott Cleland at Precursor Advisors warn that improvements at the Bells may prove short-lived. The Bells are losing most of their local lines to competitors that don't rely on the now-withdrawn wholesale discounts. Cellular, cable and voice-over-Internet phone services accounted for 56% of lost lines at Verizon over the past 12 months and 72% at SBC, they wrote. And not everyone is sanguine about the improving lot of semiconductor makers. Prudential analysts Mark Lipacis and Sam Adondakis looked into the latest inventory reports for chip vendors, distributors and buyers. After downgrading the sector to hold in April, they are sticking with their mostly pessimistic outlook. "At this point there appears to be more hope than evidence of an accelerating demand environment," they wrote this week.