US STOCKS-Wall St dips as investors mull Fed tapering after budget deal


* U.S. budget deal gets tentative approval

* Costco shares drop after profit misses estimates

* Twitter briefly touches new high but erases gains

* Indexes down: Dow 0.2 pct; S&P 0.3 pct; Nasdaq 0.3 pct

By Angela Moon

NEW YORK, Dec 11 (Reuters) - Wall Street fell modestly onWednesday as investors weighed the possibility of a wind-down ofU.S. Federal Reserve stimulus in the wake of a provisionalbudget deal reached in Wahington.

The agreement, reached late Tuesday, would end three yearsof impasse and fiscal instability in Washington that culminatedin October with a partial government shutdown.

While the deal removes a key uncertainty hanging overmarkets, some say it strengthens expectations that the U.S.central bank may soon scale back its $85 billion-a-monthstimulus that has fueled a stock market rally this year.

"Right now, the market is sort of taking all this in. Alleyes are on any (Fed) tapering in December and while the dealremoves some political uncertainties, it makes tapering morepossible," said Karyn Cavanaugh, market strategist with ING U.S.Investment Management in New York.

"We didn't have a great start to December but I'm stillexpecting a Santa Claus rally and expect to end the year higherthan now."

Investors are hesitant to make big bets ahead of the FederalReserve policy-making meeting on Dec. 17-18, in the absence ofmarket-moving economic data.

The Dow Jones industrial average fell 27.33 points,or 0.17 percent, to 15,945.8, the S&P 500 lost 5.04points, or 0.28 percent, to 1,797.58 and the Nasdaq Composite dropped 11.343 points, or 0.28 percent, to 4,049.147.

"I still have my eye on the S&P 500 index's 1,800 level,"said Bryan Sapp, senior trading analyst at Schaeffer'sinvestment research in a note to clients.

"The market saw support there twice (on Tuesday). Goingforward, though, a failure at this round number couldpotentially result in a move down to 1,780 or so, which is lastweek's pre-jobs-report low."

In company news, MasterCard Inc raised its quarterlydividend by 50 cents to $1.10 per share and announced a new $3.5billion buyback program, sending the stock up 4.6 percent to$798.47 in early trading.

Twitter shares briefly hit a new high of $52.73shortly after the open, before retreating to trade down 1.3percent at $51.30.

Costco Wholesale Corp shares slipped 2.4 percent to$117.13 after the retailer's first-quarter profit missed WallStreet estimates due to lower gasoline prices and weak foreigncurrencies.

Mining equipment maker Joy Global Inc forecast 2014earnings below analysts' estimates after reporting a quarterlyprofit that fell short of expectations as miners cut spending.The stock fell 4 percent to $53.73.

Economic data expected on Wednesday includes the TreasuryDepartment's monthly budget data for November at 2:00 p.m. EST(1900 GMT).

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