Paulson To Blame For Late Sell-Off? Read This First

We were doing so well, what happened in the last 20 minutes? Before everyone blames Mr. Paulson, examine the facts.

Late in the day Treasury Secretary Paulson did disappoint traders by saying it would take several weeks before Treasury would buy assets, but he also mentioned the powers to inject capital into financial institutions that the Treasury now has.

These are subtle reminders that the Treasury has powers it has not used yet.

The markets did not drop while he was talking. They began drifting lower after he was finished.

What sold off? Two groups stand out: financials (the ban on shorting financials ends tonight), and consumer staples like Kraft, Coke, Kellogg, Colgate, and Heinz.

Why consumer staples? They have been battered, despite being defensive names, because traders are selling what they can due to margin calls and redemptions.

There was a midday rally as Mr. Trichet made what appeared to traders as dovish comments, in favor of global coordination.

Retailers were down slightly as some big names--Nordstrom , Kohls,JC Penney , and Target, lowered earnings estimates. But they weren't down much--the Street has long since taken the stocks down in anticipation of lower earnings for both the third and fourth quarter.

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- The Dow 30 at a Glance

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