NEW YORK (Reuters) - Wall Street may extend its push for recovery this week as investors bet that a further drop in oil prices will restrain inflation and boost prospects for profit growth.

The precipitous slide, fuelled in part by a recovery in the US dollar, has now taken oil prices to around $115 a barrel — or more than 20 percent below a record set July 11.

A slide in energy prices is a welcome boost in an economy hamstrung by the housing slump and mounting mortgage losses in the financial services sector.

In the near term, consumers and business should feel some respite as energy costs recede, boosting prospects for a range of market constituents, including airlines, retail, industrial and technology sectors.

Financials are also a major beneficiary as investors shift money out of energy stocks in search of bargains elsewhere.

"I think the trend in stocks is up. I do feel that July 15 represented the bottom for stocks and we are going to move higher," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.

"I really feel that what investors are looking for right here is signs that the economy is starting to pick up right now."

As the earnings season is fast winding down, investors will have plenty of economic reports to watch this week.

In addition to keeping tabs on oil prices, investors will seek further direction from what will perhaps be the week's highlight — Thursday's release of the July Consumer Price Index, a major gauge of inflation at the consumer level.

Economists polled by Reuters expect the overall CPI to rise 0.4 percent in July, compared with June's gain of 1.1 percent. Core CPI, excluding volatile food and energy prices, is forecast to rise 0.2 percent in July vs. June's gain of 0.3 percent.

But before the CPI report, investors will pore over government data on the international trade deficit for June tomorrow, followed the next day by July reports on retail sales and import prices, and June business inventories. Friday's economic agenda will bring July industrial output and capacity utilisation data, as well as the preliminary reading for August on consumer sentiment from the Reuters/University of Michigan Surveys of Consumers. On the earnings front, a slew of retailers, including Wal-Mart Stores Inc, will help investors assess how much strain consumers face as home values slide and the squeeze from soaring food and energy costs takes its toll.

US stocks soared on Friday, capping a volatile week with their best weekly showing in more than three months.

On Friday, the Dow Jones industrial average surged 302.89 points, or 2.65 percent, to end at 11,734.32, while the Standard & Poor's 500 Index shot up 30.25 points, or 2.39 percent, to 1,296.32, and the Nasdaq Composite Index climbed 58.37 points, or 2.48 percent, to 2,414.10.

"It looks like we are finally getting the break we've been waiting for in terms of slowing down the inflation spiral that has been taking place," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a tremendous rise in the dollar, and that's putting pressure on crude oil, which is helping to buoy US equity markets."

US front-month crude oil settled Friday at $115.20 a barrel, down $4.82 for the day on the New York Mercantile Exchange. In post-settlement trading, crude tumbled more than $5 to $114.62 a barrel — more than 20 percent below its NYMEX record high above $147 set in July.

For the week, the Dow average rose 3.6 percent, the S&P 500 gained 2.9 percent and the Nasdaq climbed 4.5 percent. It was the best week for all three indexes since April 20.

But even with the likelihood that stocks may extend their push for recovery this week, Wall Street will still have plenty of reasons to tread lightly, particularly with recent signs pointing to further deterioration in the job market.

"Clearly, the economy is still weak. Some of the stimulus from the tax rebates is" ebbing, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

"The key to watch for is the unemployment number," Kumar added. "Once you go above six percent, the concerns about recession will go up."

For July, the US unemployment rate hit 5.7 percent — its highest level in four years as employers cut jobs for a seventh straight month, according to the Labour Department's monthly payrolls report released a week ago.