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Losses mount on Wall Street as markets remain closed

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NEW YORK — Wall Street firms probably lost about $1 billion in revenue since Tuesday's terrorist attack on the World Trade Center that killed thousands of people and brought U.S. financial markets to a standstill.

For the top seven firms, like Goldman Sachs Group Inc., Citigroup Inc. and Morgan Stanley Dean Witter & Co., lost commissions and trading revenue during the four-day stock market closure may total about $250 million per day, based on second-quarter earnings.

It will take months to gauge the total cost of the disaster to financial companies, many of which still don't know the number of workers they lost in the attacks. The drain on revenue will continue even after markets open as the firms rebuild and many invest in new technology and security measures. If stocks open lower, firms will also see the value of their holdings decline.

"The lost opportunities from the normal level of activity is clearly just the first pass," said Paul Stocking, senior analyst and vice president at American Express Financial Advisors, which manages about $190 billion in investments. "Then you've got their inventories of stocks and bonds taking a hit depending on where the market opens up. Presumably those valuations will fall."

Based on second-quarter earnings, daily revenue from trading and principal investments and commissions and fees ranged from $16 million per day for Bear Stearns Cos., to $57.9 million for J.P. Morgan Chase & Co. Lehman Brothers Holdings Inc. earned $20.3 million per day, Citigroup earned $28.2 million, Goldman Sachs earned $40.5 million, and Morgan Stanley earned $45 million.

Over four days, the earnings for the top seven firms would total about $1 billion. Most of those firms have global operations, so they have continued to make money outside the U.S. while domestic markets were closed, which would mitigate the losses.

For companies such as Merrill Lynch & Co. and Lehman Brothers, based in the World Financial Center near the twin towers, it could be an extended period of time before they can return to their offices. The condition of that building isn't clear. Merrill General Counsel Stephen Hammerman said the offices remain without power or efficient access.

"They're going to have a lot of out-of-pocket expenses for spending on buildings, physical property, technology, higher levels of security," said Stocking. "Obviously, there's nothing they could have done to prevent this but there will be higher levels of security consciousness."