The already subdued earnings outlook for the investment banking sector got a little gloomier Wednesday as leading Wall Street analysts sharply cut back profit estimates on the group's major firms.

Judah S. Kraushaar, an equity analyst with Merrill Lynch & Co., slashed his estimates on Goldman, Sachs & Co., Morgan Stanley Dean Witter, and Lehman Brothers. In each case he cited persistence of problems that hampered the industry last quarter. Those include weakness in equity underwriting and mergers-and-acquisition business, and a continued absence of retail investors from the market. He also raised concern over the possibility of more losses stemming from the private equity business.

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