Investors have been expecting the Fed to cut rates half of a percentage point, to 3 percent, according to futures trades logged by www.Intrade. com and by Bloomberg Finance L.P. The stock market has fallen on fears that low housing demand and high oil prices will slow the economy, forcing it into recession over the next year.

Cheaper money would ease the pressure on some consumers and corporate borrowers, but would also make U.S. bonds less attractive to foreign investors on whom the Treasury and U.S. companies depend. Still, Wall Street wants cheaper money to reverse recent stock market losses.

"A half-point is what the market expects, and what really we should get if [Fed Chairman Ben S.] Bernanke wants to continue to demonstrate leadership," Haverford Trust Co. chief investment officer Henry Smith told Bloomberg.

But that is too big a cut, Commerce Bancorp Inc. chief economist Joel L. Naroff told clients in a morning note. Yesterday's U.S. durable-goods report showed a jump in demand for computers and machinery, which means most workers' jobs are not in danger, even though car and home demand is down.

So, last week's rate cut of three-quarters of a percentage point, "instead of satisfying the market beast, only added to the bloodthirst," Naroff wrote. He predicted a cut could be smaller than traders think.

Economists say the nation is in a recession when gross domestic product shrinks two quarters in a row. In the most recent quarter last fall, the economy grew a robust 4.9 percent, according to revised Commerce figures.

But a majority of futures traders who have placed bets expect there will be a recession before the end of 2008, according to Intrade data, said Kevin Gates, portfolio manager at TFS Capital L.L.C., of West Chester.

"These markets did a better job predicting the outcome of the 2004 election than the exit polls did, and unfortunately, they show we are probably headed into a recession," Gates said. The S&P index, down 7 percent so far this month, is another sign that bears are in charge.

With lenders refusing credit to risky buyers and with median new-home prices down more than 10 percent from the spring's highs, builders "have no choice but to reduce prices," analyst Frank Lee of CreditSights Inc. said in a conference call with reporters.

Prices likely will keep dropping, he added. "There's more pain ahead."

Tousa Inc., a $2.3-billion-asset Florida home builder, became at least the 14th U.S. builder to declare bankruptcy since the summer, Bloomberg News reported yesterday.

Not all companies are sharing the pain. The Standard & Poor's 500 index is down about 14 percent since July, when the collapse of the subprime-loan market accelerated the decline in bank stocks.

Since then, among the biggest Philadelphia-area corporate employers, defense contractor Lockheed Martin Corp., drugmaker Merck & Co. Inc., chemical manufacturer Rohm & Haas Co., and telecom giant Verizon Communications Inc. generally have outperformed the market, while cable-TV-network Comcast Corp. and Acme Markets, owner of SuperValu Inc., have trailed.

Since Jan. 1, DuPont Co. is up 6 percent, as the Wilmington-based maker of auto paint, seeds, weed-killers, bullet-proofing and other products said foreign operations were boosting profit despite the U.S. slowdown. DuPont is the only member of the benchmark 30-stock Dow Jones industrial average based in the Philadelphia area.

In a conference call Jan. 22, Goldman Sachs Group Inc. analyst Bob Koort challenged DuPont chairman Charles "Chad" Holliday Jr. on whether "Europe is going to be lagging the U.S. and head toward recession as well."

Holliday agreed Western Europe was growing only slowly. But DuPont is benefiting, he said, from the lower U.S. dollar and better sales in China, Russia, Latin America, and other fast-growing markets.