) -- U.S. stock markets posted their first weekly decline in July as investors balked at surpassing the 1,700level on the

S&P 500

, unsure about the strength of the U.S. economic recovery and the

Federal Reserve

's commitment to maintain its stimulus program.

The S&P 500 turned positive in the final minutes of Friday's trading as it increased 0.08% to 1,691.65 but slipped 0.03% for the week. The

Dow Jones Industrial Average

added 0.02% to 15,559.20, and added 0.1% for the week. The


finished up 0.22% at 3,613.16 and up 0.22% for the five-day trading period.

"For me, it has been and will continue to be all about the Fed and its willingness to continue $85 billion per month of MBS

mortgage-backed security and Treasury purchases," said Michael Pento, president of Pento Portfolio Strategies based in Holmdel, N.J.. "If there is a tapering commenced in September, the equity market will react negatively and interest rates will spike towards 4% on the ten-year note."


(EXPE) - Get Report

posted the biggest percentage loss in the S&P, dropping 27% to $47.20 after the online travel service company missed second-quarter estimates by 15 cents at 64 cents a share, a result of poor performance at its Hotwire unit.


(SBUX) - Get Report

was a clear winner, jumping 7.6% to $73.36 after the coffee chain posted fiscal third-quarter results that

surpassed Wall Street expectations

. Starbucks' Americas segment is "firing on all cylinder," Starbucks CEO Howard Schultz said on the conference call.

Cliffs Natural Resources

(CLF) - Get Report

advanced 7.2% to $19.71 after the coal producer booked second-quarter earnings of 82 cents a share on revenue of $1.49 billion, surpassing the average analyst earnings estimate of 61 cents a share on revenue of $1.41 billion.

Tesla Motors

(TSLA) - Get Report

popped 4.3% to $129.39 after one of the stock's biggest bears upgraded the stock, saying the stock could

more than double

in the next three or four years.

Next week, the

Federal Reserve

begins a two-day policy meeting as investors await the widely-watched U.S. government non-farm payrolls report for July, scheduled to be published on Friday. The government will also released its advance estimate of second-quarter U.S. gross domestic product on Wednesday.

Pento added that there's a potential for downside risks no matter the outcome of key U.S. data next week and therefore advises investors to sell into the resumption of a rally.

"A negative surprise

on the job report to the downside would keep the Fed on hold but will send shares lower because investors need rising GDP and revenue growth to justify current stock prices," said Pento. "However, a reading much above 200,000 may boost the equity market in the short term but would lock in a tapering in September. Therefore, I would fade any rally."

Economists on average are expecting nonfarm payrolls to reach 184,000 for July and the jobless rate to come in at 7.5%, according to a

Thomson Reuters

poll of economists. Pento is predicting the job report to show a decline to 185,000 with the unemployment rate at 7.6%.

According to

Thomson Reuters

, the blended estimate for the second quarter, which reflects reported results and analyst expectations, is for year-over-year earnings growth of 3.9% from the S&P 500, down from 5.4% in the first quarter. So far 39% of S&P 500 companies have reported their earnings results.

The benchmark 10-year Treasury was rising 3/32, diluting the yield to 2.565%.

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Written by Andrea Tse and Joe Deaux in New York

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Andrea Tse