Stacks of sandbags were still protecting the entrance to the New York Stock Exchange and Goldman Sachs on Tuesday. Pockets of the financial district in Lower Manhattan remained underwater. Electric power was shut off for parts of the surrounding neighborhood.
But despite the damage from Hurricane Sandy, Wall Street is preparing to open for business on Wednesday. After closing the stock and bond markets for two days, the N.Y.S.E., Nasdaq and other trading platforms are set to resume normal operations, following nonstop meetings and extensive testing of their systems.
Wall Street now faces a critical test.
The exchanges want to get up and running as soon as possible to serve their clients and show they can operate in difficult conditions. A long delay could frustrate investors and damage their image.
"It's incredibly important to open these markets," said Miranda Mizen, director of equities research at TABB Group. "It says New York is open for business."
(Read More: The NYSE Mulls the Reopening)
But a quick restart of trading might result in unexpected problems. If the exchanges open before they are truly ready, the markets might be vulnerable to complications that could ripple through the financial system.
"You don't want a false start," said Matt Samelson, a principal at Woodbine Associates, a consultancy firm. "It'd be better to have everything in place before flicking on the switch and having a misstep."
Given the potential challenges from the storm, Wall Street has spent the last few days in emergency mode. The New York Exchange and Nasdaq said their systems are ready to resume operations. But some firms that trade on the exchanges continued to face problems in the aftermath of the storm.
In preparation, the New York Exchange created an emergency response team, and roughly 30 staff members have been sleeping at the Lower Manhattan headquarters. On Tuesday afternoon, the exchange conducted trial runs with financial firms to detect potential bugs.
Wall Street's main trade group has been advising firms and exchanges. The group, the Securities Industry and Financial Markets Association, in recent days has talked with more than 400 regulators, exchange executives, traders and New York City officials.
Federal authorities also weighed in. Treasury Secretary Timothy Geithner, stranded in California by the storm, convened a phone conference with bank regulators to plan for assessing damage on Wall Street and preventing major issues from derailing trading. Throughout Tuesday, banks sent updates to regulators about their buildings, including any flooding and power outages.
As the markets prepared to go back online, exchange officials and regulators braced for technical problems. The Securities and Exchange Commission spent much of Tuesday walking the exchanges through checklists that aim to detect potential mishaps.
"Right now there are a lot of connectivity problems," Larry Leibowitz, the chief operating officer of the NYSE Euronext, said Tuesday.
Some trading firms with damaged data centers, he said, encountered problems connecting to the Big Board's systems. One nearby building that houses several firms, Mr. Leibowitz said, sustained significant damage that could hamper their ability to operate.
The industry is operating in relatively new territory.
The last time the New York Stock Exchange closed for two consecutive days for weather-related reasons was 1888. After 9/11, the Big Board closed for four days.
Regulators require financial firms to have detailed backup plans to deal with large disruptions like storms and terrorist attacks. Some market observers have been critical of the decision to close the stock markets, saying it shows these contingency plans failed.
"The whole process was designed so that the exchanges would never have to close again like this," said Chris Nagy, president of KOR Trading, which provides consulting to brokers and exchanges.
(Read More: Sandy Wreaks Havoc, Economic Impact Not Yet Clear)
On Tuesday, the scene around Wall Street was desolate. While the New York Exchange's building appeared to be unscathed, many other offices in the vicinity were flooded. After an underground parking garage two blocks from the exchange was inundated with water, several cars floated to street level.
Two Citigroup buildings were without power. The bank told employees in a memo on Tuesday that one of the buildings, 111 Wall Street, sustained "severe flooding and will be out of commission for several weeks."
Most major Wall Street firms have backup trading floors. They are often left empty for months on end. Employees are required to visit them regularly so they can be used on short notice.
Some JPMorgan Chase employees outside New York City were working in central New Jersey. At the bank's main trading floor in Midtown Manhattan, employees, many in jeans, shirts and rain boots, booked hotels for the night and discussed strategy. The bank, which sustained minimal damages at a building downtown, expected to resume normal operations in Midtown.
Credit Suisse also planned to open for business on Wednesday, with its main offices by Madison Square Park running on backup power. The company has been providing buses and hotels for critical staff to work at the building, with other employees working from contingency centers in northern New Jersey and elsewhere in the metropolitan area.
In downtown New York, Goldman Sachs was one of the few buildings with power. The firm has a generator in the event of outages, allowing its trading floors to continue to run. On Tuesday, televisions sets and lights inside the building were on, although few employees were there. One Goldman staff member who declined to give his name said he came to the office to charge his cellphone.
In a memo to staff, Goldman announced its headquarters would be open on Wednesday. The firm also booked hotels in various locations to make sure employees could get to work.
On Wall Street, the greatest relief came when the New York Exchange, the nerve center of the financial markets, announced that it was set to open both its electronic platform and its physical trading floor. The exchange has plans for the 200 or so floor traders to be in place. A number of traders and other exchange personnel live in areas where mass transit has been suspended, so the exchange has arranged cars for many people.
Peter Costa, president of Empire Executions in New York, said he planned to be on the floor of the New York Exchange for Wednesday's 9:30 a.m. opening. Mr. Costa, who lives on Long Island, is aiming to leave his home at 6 a.m. to make sure he is there in time. A number of his colleagues are making similar plans, with some car-pooling to work.
Gordon Charlop, managing director at Rosenblatt Securities on the floor of the New York Exchange, wants to leave his house in Nassau County even earlier, around 4 a.m., in case of any technical glitches.
"I want to make sure I get in plenty of time just in case something happens," he said.
— Peter Eavis, Barry Meier and Michael J. de la Merced contributed reporting.