US SMALL/MIDCAPS-Associated, Carter's pull stocks lower

By Chuck Mikolajczak

NEW YORK, Nov 10 (Reuters) - A restatement from Carter's Inc (CRI.N: Quote, Profile, Research) and a drop in Associated Banc-Corp (ASBC.O: Quote, Profile, Research) after an agreement with regulators weighed on midcap and smallcap stocks on Tuesday, a day after they surged more than 2 percent.

Smallcap Carter's slumped 10.2 percent to $21.58 after the children's clothing retailer said it would restate some historical results for periods beginning in 2004. For details, see [ID:nBNG493568]

Credit ratings agency Moody's subsequently placed Carter's on review for a possible downgrade.

"The restatement and the filing of the 10-Q may be weeks away, hopefully in December, but it could possibly drag into the New Year," said Margaret Whitfield, senior analyst at Sterne Agee & Leach.

Whitfield said, however, that Carter's "underlying business is quite healthy and that the issues related to the mark-down accommodations which may involve restatements detract from what is going on with the company overall."

Midcap Associated Banc-Corp tumbled 16.2 percent to $10.64 after the regional lender said its banking unit had agreed with regulators to maintain strong capital levels, sparking concerns a dilutive equity offering may be forthcoming. [ID:nBNG504134]

Exercise equipment maker Nautilus Inc (NLS.N: Quote, Profile, Research) fell 9.4 percent to $1.94 after posting third-quarter earnings that topped the consensus analyst expectation but reported revenue that fell short of the analyst average estimate by about $20 million.

The S&P SmallCap Consumer Discretionary index fell 1.4 percent.

The S&P MidCap 400 index dipped 0.4 percent while the S&P SmallCap 600 index slid 1 percent. By comparison, the broader S&P 500 index .SPX edged lower by 0.1 percent.

The S&P MidCap Financial index slipped 1.1 percent. (Reporting by Chuck Mikolajczak; Editing by Padraic Cassidy)