* 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 on Wednesday as investors weighed the possibility of a wind-down of U.S. Federal Reserve stimulus in the wake of a provisional budget deal reached in Wahington.
The agreement, reached late Tuesday, would end three years of impasse and fiscal instability in Washington that culminated in October with a partial government shutdown.
While the deal removes a key uncertainty hanging over markets, some say it strengthens expectations that the U.S. central bank may soon scale back its $85 billion-a-month stimulus that has fueled a stock market rally this year.
"Right now, the market is sort of taking all this in. All eyes are on any (Fed) tapering in December and while the deal removes some political uncertainties, it makes tapering more possible," 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 still expecting a Santa Claus rally and expect to end the year higher than now."
Investors are hesitant to make big bets ahead of the Federal Reserve policy-making meeting on Dec. 17-18, in the absence of market-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 5.04 points, 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's investment research in a note to clients.
"The market saw support there twice (on Tuesday). Going forward, though, a failure at this round number could potentially result in a move down to 1,780 or so, which is last week's pre-jobs-report low."
In company news, MasterCard Inc raised its quarterly dividend by 50 cents to $1.10 per share and announced a new $3.5 billion buyback program, sending the stock up 4.6 percent to $798.47 in early trading.
Twitter shares briefly hit a new high of $52.73 shortly after the open, before retreating to trade down 1.3 percent at $51.30.
Costco Wholesale Corp shares slipped 2.4 percent to $117.13 after the retailer's first-quarter profit missed Wall Street estimates due to lower gasoline prices and weak foreign currencies.
Mining equipment maker Joy Global Inc forecast 2014 earnings below analysts' estimates after reporting a quarterly profit that fell short of expectations as miners cut spending. The stock fell 4 percent to $53.73.
Economic data expected on Wednesday includes the Treasury Department's monthly budget data for November at 2:00 p.m. EST (1900 GMT).