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Wall Street opens flat on fiscal cliff caution

Stocks opened slightly lower on Tuesday as worry over the threat to the economy posed by the fiscal cliff offset optimism from a deal to ease Greece's debt burden. 

Shortly after the opening bell, the Dow Jones industrial average dipped 33.02 points, or 0.25 percent, to 12,934.35. The Standard & Poor's 500 Index shed 2.58 points, or 0.18 percent, to 1,403.71. The Nasdaq Composite Index lost 4.07 points, or 0.14 percent, to 2,972.71. 

Market sentiment improved after European finance ministers and the International Monetary Fund clinched agreement late on Monday on reducing Greece's debt and releasing emergency loans to keep Greece from defaulting. 

But as Democrats and Republicans prepared to resume budget negotiations this week in Washington, the market turned cautious. 

As of Monday's close, the S&P 500 was holding above the 1,400 level it retook last week. But volume continued to be weak as traders awaited any advance in talks between the Obama administration and Congress to avert a series of spending cuts and tax increases scheduled to begin next year. Last week, the broad stock index rose nearly 4 percent. 

"Advancing volume trends have failed to surge during the S&P 500's 4 percent bounce from its November 16 low, suggesting recent strength can be attributed to a lack of selling pressure rather than fresh buying demand," said Ari Wald, analyst at the PrinceRidge Group in New York. 

"We would like to see this spread turn positive to confirm an upward S&P 500 reversal," he said. 

Government data on October durable goods orders showed a gauge of planned spending by businesses increased by the most in five months. But a fourth straight month of declines in shipments underscored the damage that fears of tighter fiscal policy next year are having on the economy. Market reaction to the Commerce Department report was muted. 

"On balance, you would have to look at this number and say it is encouraging. It is one piece of a many piece puzzle, but a good piece," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York. 

"For those of us that are worried about the economy in 2013, given the uncertainty of the fiscal cliff, this is a little bit helpful. But that doesn't remove the overarching worry about the cliff or that tax policy and spending policy will not be right, given the weak economy." 

Separate data showed U.S. single-family home prices rose in September in a further sign that the housing market is on the mend. 

Europe is preparing to follow the United States in delaying the introduction of stricter rules on bank capital, while it lobbies for a reconsideration of the U.S. stance, EU sources said. 

However, the head of the Basel Committee at the Bank of International Settlements told Reuters on Tuesday that the introduction of stricter capital rules for banks will go ahead as planned on January 1. 

Reuters contributed to this report.