NEW YORK (CNN/Money) - A sinking stock market, sluggish trading volume and falling commissions have hammered the stock brokerage business, but the online brokerage business has suffered another slight: the retreat of the individual investor.

The extent of that retreat became clear this week when Charles Schwab Corp. and Ameritrade Holding Corp. said February trading volume tumbled from January's already low levels.

Shares of Schwab fell 45 cents, or 6 percent, to $6.67 Friday, leaving them 87 percent below their 1999 peak. Ameritrade sank 39 cents, or 9 percent, to $3.96, and is now off 93 percent from its high. And the other online broker, E*Trade Group, is off 94 percent from its top after falling 21 cents, or 5 percent, to $3.70 Friday.

Richard Repetto, who follows the three brokers for Putnam Lovell NBF Securities, blamed the risk of war with Iraq for further unnerving investors already stung by three years of market declines.

"It's going to take a while for the retail investor to come back into the market," said Repetto, who owns none of the three stocks. Putnam Lovell does no investment banking with the companies.

Like selling airline tickets and holding auctions, online trading has proven one of the few ways to make money on the Internet. But though the online trading business may struggle for months or years, Repetto and others are confident it's not going the way of Pets.com, Webvan and other Internet concepts that crumbled under the weight of financial losses after the Internet bubble burst in 2000.

"It works and is not going away," said Morty Schaja, president of Baron Capital Management, whose $5 billion in assets includes shares of Charles Schwab and Ameritrade. Schaja says these stocks are trading at levels that assume an unreasonably downbeat outlook.

"Trading activity will recover," he said. "Not next month, but it will recover."

Without being more specific, Charles Schwab (SCH: Research, Estimates) warned Thursday that Wall Street's first-quarter profit forecast of 7 cents a share is too high. The company also said February trading volume fell 16 percent from January.

Ameritrade (AMTD: Research, Estimates) Friday cut its March-quarter profit forecasts to 1 to 2 cents a share, compared with forecasts of 5 cents a share. Trading volume slipped 25 percent in February, Ameritrade said.

E*Trade (ET: Research, Estimates) did not give any business update. Analysts surveyed by First Call expect the company to earn 11 cents in the quarter ending this month, up from 8 cents a year ago.

The three companies have slightly different business models. Charles Schwab, based in San Francisco, is by far the biggest with more than $4 billion in revenue last year. In addition to being a broker, Schwab moved into the money management business with the purchase of U.S. Trust, which has some $80 billion in assets.

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Menlo Park, Calif.-based E*Trade, with $2 billion in 2002 sales, has a retail bank with lending and ATM services.

Ameritrade has remained closest to its online brokerage roots. The company, which bought rival Datek last year, became famous for commercials featuring "Stuart," the 20-something tech-boom day trader who urged his boss to buy more shares of Kmart -- before the retailer went bankrupt. Ameritrade is based in Omaha, Neb.

To weather the bear market downturns, all three companies have been cutting costs. To that end, Schwab took the unusual step Thursday of saying it will stop matching its employees' 401(k) contributions.

Dennis Ceru, director of online brokerage and investing research for the Tower Group, which advises the financial industry, said that the average number of online trades peaked in 1999 at 800,000 a day. By last year, that figure had fallen by about half to 390,000 a day, he said.

"It's not unexpected to see announcements like this," Ceru said of Schwab's and Ameritrade's news. Like traditional brokerage firms, the online companies, Ceru said, have also suffered from falling commissions that came when stock prices converted from fractions to decimals.

While retail investors have stayed away, a core of professional traders use online brokerage firms regardless of market conditions, Ceru said.

As for the stocks, a bittersweet anniversary comes next month. It was April 13, 1999, that the share prices of Ameritrade, Charles Schwab and E*Trade all peaked.