The cooling of U.S. stock markets continues to take a toll on discount brokerages, with

Schwab

(SCH)

warning Tuesday that earning as much as it did last year will be a struggle in the second quarter.

Despite the bad news, Schwab's stock, which had lost 35% since peaking in mid-January, added 10 cents, or 1.3%, to $9.15.

Ameritrade

(AMTD) - Get Report

, which last week tempered its own earnings forecast amid a trading drought, rose 5 cents, or 0.4%, to $11.31, while

E*Trade

(ET) - Get Report

slipped 3 cents, or 0.3%, to $10.80.

Schwab, which recently implemented a series of price cuts that analysts worried would crimp future profitability, said daily trades by its customers averaged 201,900 in May, down 15% from April. Customer assets totaled $984.9 billion at the end of the month, up 1% from April, primarily reflecting stock market gains.

Compared with a year ago, average trades rose 1% while total customer assets rose 18%.

"In light of flat to negative securities market returns, continuing geopolitical uncertainty and concerns about rising interest rates, client engagement has weakened over the past six weeks," Schwab said. "This slowdown is pressuring the Company's ability to improve its second quarter earnings over the same period last year."

The company earned 9 cents a share in the second quarter of 2003. Analysts surveyed by Thomson First Call were forecasting earnings of 11 cents a share in the current period.