Updated from 2:20 p.m. ET

Anyone with half an eye on


could figure out that July wasn't a great month for trading


stocks. Apparently, at

National Discount Brokers Group

( NDB) it was next to awful.

The online broker and market maker surprised the market Friday with news that it would book a loss of 6 cents to 9 cents a share for its fiscal first quarter ended Aug. 31. Analysts had expected that it would earn 11 cents a share for the period, according to


. During the past eight weeks, those estimates were as high as 32 cents a share before falling to 21 cents and then 11 cents last week.

The stock, which had been trading above $30 since May, finished Friday regular trading down $8, or 22%, at $27.81.

NDB blamed higher employment costs for the shortfall, but it also cited July's "adverse market conditions," meaning low trading volumes and a decline in the Nasdaq, which was off 5% for the month. When investors trade less, NDB's market-making arm has fewer buy and sell orders to match, and thus makes less money. A declining market can also be tough for market makers, which traditionally act as the buyer of last resort for stocks -- putting up their own capital to maintain an orderly market.

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NDB's quarter ends a month earlier than many of its competitors. That means it's offering the first glance at what the months of July and August may have been like in terms of profits at the market-making divisions of

Charles Schwab

( SCH) and

Knight Trading Group


. Knight was off 38 cents at $39.88, while Schwab was up 6 cents at $38.31.

A Schwab spokesman said his firm's August trading-volume figures would be released in mid-September. He declined to comment on the potential impact on earnings. In July, Schwab customers traded about 10% more than in June, indicating that volume at its market-making division, where many of its orders are executed, most likely rose. A Knight spokesperson wasn't immediately available to comment.

Greg Smith, an analyst at

Chase H&Q

, pointed out that volume typically picks up in September, which would help firms whose quarters end Sept. 30. Smith believes that strengthening volume, along with talk of consolidation in the sector, will buoy online brokerage stocks --

two points some other sell-side analysts made earlier this week.

NDB, meanwhile, was dealing with more than a rocky market. For the August quarter, the company said that its staff size increased 35% from the year-ago quarter, driving up pretax expenses by 34% to $70 million. Total revenue, meanwhile, climbed 26% to an estimated $67 million, the company said in a statement.

In the quarter ended May 31, NDB earned 43 cents a share as exploding trading volume in March and April offset declines in May. In the year-ago quarter, it earned 2 cents a share on revenue of $53 million.

This isn't the first time NDB has missed estimates. A few weeks before it reported fiscal first-quarter figures last year, it said it expected an earnings shortfall due to higher advertising and technology-related expenses.