NEW YORK (CNN/Money) - A week ago the chances of a rate cut at the Fed's meeting next week seemed like a remote possibility. Now, many investors are viewing it as a done deal.

Tuesday's economic bombshell sank it. The Conference Board's consumer sentiment index plunged to 79.4 in October -- the lowest level in nearly nine years -- from 93.7 in September, marking the most dramatic decline since the Sept. 11 terrorist attacks.

Consumer confidence plunged in October to the lowest level in nine years. CNNfn's Kathleen Hays reports. Play video (QuickTime, Real or Windows Media)

Investors sold stocks, but more tellingly they bought bonds at a feverish pace on the expectation that by the end of its meeting next week, Federal Reserve policy makers will have cut their target for the fed funds rate by at least a quarter point. The overnight bank lending rate already stands at a 40-year low of 1.75 percent after the Fed, the nation's central bank, cut rates 11 times last year.

"There's been just a massive repricing of Fed easing expectations," Credit Suisse First Boston bond market strategist Mike Cloherty said. "We've shifted to where, unless you get reports that are much stronger than expected at the end of the week, you need to look for Fed action."

Two key reports are due Friday -- the jobs numbers and the Institute for Supply Management's Purchasing Managers' Index -- and both are expected to show that the economy lost momentum as the fourth quarter began. Economists surveyed by Briefing.com think job creation in October was nil and that the unemployment rate ticked back up to 5.8 percent from September's 5.6 percent. The October Purchasing Managers' index is expected to slip 0.6 points to 48.9, which would show further erosion in the manufacturing economy.

Thursday's gross domestic product report, which is expected to show a gain 3.6 percent in the third quarter, isn't likely to draw that much attention. Nobody doubts that the economy showed good growth over the summer.

"People aren't arguing about the third quarter, they're arguing about what is going to happen now," said Arnhold & S. Bleichroeder economist James Padinha.

The idea that the Fed could cut rates when its policy makers meet Nov. 6 began to pick up steam last week. A writer for Market News International, which some investors say the Fed occasionally uses as a mouthpiece, reported that although Fed officials believe the economy remains on the path to recovery, "the Fed does not want to risk a further weakening of the economy, and so it is undoubtedly closer to taking action to ensure that this does not happen."

Friday's article was followed by one Saturday in the Washington Post (by another one of those alleged Fed mouthpieces) saying the Fed looked set to cut rates this year, perhaps at next week's meeting. And Monday, the Wall Street Journal weighed in, saying that renewed sluggishness made a cut likely.

Fed-funds futures -- monthly futures contracts that indicate how traders are betting the Fed will act -- now put the chance of a quarter-point cut next week at 78 percent. Last Thursday the futures put the chance of a quarter point cut at just 5 percent.

"What we're spending our time debating is whether the Fed goes a quarter point or a half point," Dana Johnson, head of capital markets research at Banc One Capital Markets, said Tuesday.

How far the Fed cuts, Johnson said, is probably going to be a function of where the internal debate at the Fed is right now.

Two members of the Fed's policy-making Federal Open Market Committee wanted to cut rates at the September meeting but were overruled by others who thought the economy had the momentum to get through the fall.

If there still are holdouts who think the economy doesn't need any more juice, Johnson said, the Fed will go by only a quarter point at this meeting and then follow up at the December meeting with another quarter-point reduction. But if everyone is convinced of the need to ease, a half-point cut could be in the cards.

Other analysts say the Fed may just cut a quarter point next week, and if the central bankers feel more is needed, they can always cut more later.

"Keep in mind that monetary policy works with a lag, so that this shouldn't have any impact on the consumer," Banc of America Securities chief economist Mickey Levy said. "My guess is a quarter point."

But others think that, if the worry really is that the economy could slip back into recession, it doesn't make sense for the Fed to move in such an incremental fashion. If the jobs and ISM reports on Friday do, in fact, show a renewed bout of weakness, they reckon the Fed will move aggressively.

"I'm expecting Friday's numbers to print poorly," Padinha said. "If that happens I will tell clients they should expect the Fed to cut by a half point."