It was a law of nature, according to Wall Street. Whenever the Federal Reserve cut rates, the stock market moved higher in six months or so, writes Gretchen Morgenson in The New York Times.

Such was the chant in January, when Alan Greenspan began his most recent rate-cut crusade. But as the ensuing months in the market have shown, brokerage- firm gurus are better at salesmanship than science, writes Morgenson. The natural law they cited appears to have been suspended.

Including the quarter-point cut last Tuesday, rates have been slashed by three percentage points this year. Yet the economy has weakened and the sure-thing bull market is missing.

Notwithstanding the rally on Friday, the Standard & Poor’s 500-stock index is down 10 percent for the year, while the Nasdaq has lost 22 percent.

Investors appear to be recognizing that many woes faced by corporate America cannot be eliminated with a wave of Mr. Greenspan’s wand. The cold truth is, when borrowers are up to their eyebrows in debt, even the most aggressive interest rate cuts can’t seduce lenders into making additional, and riskier, loans.

Balance sheets are now dictating events. And these aggregations of assets and liabilities, whether they belong to a company or a consumer, are in awful shape.

Corporate borrowing in recent years has been an unadulterated binge. In 2000, according to the Fed, corporations borrowed $437 billion, almost double the amount raised in 1995. Corporate debt recently stood at 85 percent of gross domestic product, a record high.

Now, however, lenders are pulling back. While lower rates have resulted in sizable bond issuance, Moody’s Investors Service expects corporate debt to increase just 5.2 percent this year, well down from the 11.5 percent gain in 2000. And lenders, although willing, have demanded higher yields, compared with the risk-free benchmark.

As long as the capital markets were willing to throw money at companies, they could spend more than they made. Consider how wide the gap had become between what companies spent on projects and what they made in cash flow. That difference, financed by investors and lenders, hit $251 billion at the end of last year. In 1995, it was $100 billion.

Now, even as the Fed has cut rates, liquidity provided by investors and lenders is drying up.