Stock trading always slows in the summer, but this summer it was especially dead. Blame the rush out of stocks, the poor economy, the newfound interest in saving and a host of other factors.

For Wall Street firms that make significant income from these trades, the summer slowdown is translating into ugly third-quarter earnings. Case in point: The investment banking firm Jefferies Group (JEF), whose quarterly profit was nearly cut in half (shares are down 5% Wednesday in response).

Revenue fell by 22%, mainly due to a steep drop in principal transactions, the Associated Press reported. Needless to say, Jefferies did not meet analysts' expectations. The chief executive said that "trading volumes across the board were painfully slow."

One securities firm said that overall daily trading in June, July and August was down 18% on the NYSE and 24% on Nasdaq compared with the three prior months, The Wall Street Journal reported.

Some people are predicting more gloomy earnings on Wall Street, followed by layoff announcements. Bank of America (BAC) is said to be trimming its investment banking and capital markets group by 3%. It'll be interesting to see what Bank of America reports for its third quarter on Oct. 19. Post continues after video:
So analysts are taking a cue from Jefferies today and slashing earnings expectations on Wall Street, the Journal reported. Goldman Sachs (GS) and Morgan Stanley (MS) went under the knife, and are down 2.4% and 4.5%, respectively, in afternoon trading. But Jefferies is said to be weaker because it has more exposure to the U.S. than its Wall Street counterparts.

The question now whether Jefferies is a bellwether for the rest of Wall Street. Are we in for more earnings surprises?