Charles Schwab

(SCH)

said trading slowed in January and the early part of this month, and indicated that the unexpected shortfall could affect the firm's earnings.

Schwab said total client daily average trades fell to 281,800 in January, 26% below the same month last year. Client daily average revenue trades also dropped 26% to 222,200. The firm said it brought in $12.5 billion in new assets and 100,000 new accounts.

Schwab said its numbers continued to slip in February as daily average revenue trades fell to 182,000. "February has softened more than we had expected," a Schwab executive said, according to published reports. "Given this kind of trading environment, we think that achieving the (first-quarter) consensus estimate will be quite difficult."

Seventeen analysts polled by

First Call/Thomson Financial

are calling for Schwab to earn 15 cents in the quarter, below the 22 cents the company earned in the year-ago period.

"Ongoing investor concerns about near-term corporate earnings and economic growth continued to weigh on client trading activity, especially in individual equities," the firm said in a statement. "Our clients appear to be allocating more of their current investments to mutual funds, putting over $4 billion to work in funds through Schwab in January alone -- including record bond fund inflows of $922 million -- making this the second largest month of mutual fund net inflows in Schwab's history.''

The firm said it is continuing to manage expenses, noting that a cost-cutting initiative requiring a number of employees to stay home on

Friday's without pay, has reduced the company's "full-time equivalent employees" by more than 500 since the end of December.

Shares of Schwab, which is based in San Francisco, ended the

New York Stock Exchange

trading session at $24.40, down 36 cents, or 1.5%.