E*Trade, Online Brokers Stumble

Updated to add information on E*Trade's disclosure of September trading activity, and latest share prices.

NEW YORK (TheStreet) -- E*Trade (ETFC Quote) shares and those of rest of its online broker brethren were mostly tracking lower on Thursday after an analyst said early indications are pointing to a sequential dip in trading activity in September.

New York-based E*Trade's stock was off 7.4% to $1.62 in afternoon action on volume of more than 110 million. Elsewhere in the group, Charles Schwab (SCHW Quote) was down 2.4%, optionsXpress (OXPS Quote) lost 1.4%, TradeStation (TRAD Quote) gave back 2%, and TD Ameritrade (AMTD Quote) fell 0.25%. Only Interactive Brokers Group(IBKR Quote) bucked the trend, adding 1.2%.

The action follows a note from Sandler O'Neill Partners analyst Richard Repetto saying his channel checks indicate overall DARTs, or daily average revenue trades, for the online brokers for September are tracking about 5% below August levels, which were generally viewed as robust. Specifically, Repetto estimates E*Trade, Charles Schwab and TD Ameritrade will post flat DARTs for the month compared to August.

"With an unseasonally strong August, the modest decline in September trading volumes should not be a huge surprise," says Repetto in the note, which also includes estimates for September DARTs at for optionsXpress's retail business (up 5%); Interactive Brokers (up 5%) and TradeStation (up 15%). Repetto writes the projections for individual companies were dependent largely upon the timing of the firm's update to its forecasts.

"Our September assumptions generally declined over the course of the month as retail activity remained relatively weak following the Labor Day Holiday," he adds. Repetto says the potential quarterly downside to earnings per share for the brokers he covers ranges from less than a penny to two cents.