The pandemic day-trading boom has gone bust.

A swooning stock market and high inflation have sapped individual investors’ enthusiasm for buying and selling stocks. That was on display in earnings reports and financial disclosures from some of the biggest retail brokerages in recent weeks.

The average daily number of retail trades handled by Charles Schwab Corp. fell to 5.52 million in the third quarter, the lowest level since it acquired TD Ameritrade Holding Corp. in late 2020. At Morgan Stanley, retail traders placed an average of 805,000 trades a day in the third quarter. That was down 16% from a year earlier and the lowest level since the investment bank bought E*Trade Financial Corp. in late 2020.

Those activity levels are well off highs notched at the zenith of the meme-stock era, when individual investors drove rallies in the share prices of companies including GameStop Corp. In the first quarter of 2021, Schwab reported 8.41 million daily average trades, while Morgan Stanley reported 1.62 million.

U.S. stock indexes are down sharply this year. They declined Wednesday, snapping a two-day winning streak.

“Obviously, we’re seeing some decreased level of transactional activity,” said Andy Saperstein, Morgan Stanley’s co-president and head of wealth management, at an investor conference in September. “But really nothing that I would say is either surprising or anything but rational if you have a market like this.”

At Robinhood Markets Inc., the go-to trading app for young investors, July was the weakest month for average daily volume for stocks and options trading in company records going back to March 2021. The company saw a slight rebound in August, the most recent month for which data are available.

Robinhood Chief Executive Vlad Tenev said at the September investor conference that the company’s customers care about different things this year compared with one or two years ago, citing Google Trends searches as a good proxy.

“2020 and 2021, people were really interested in investing in stocks,” Mr. Tenev said. “There was widespread participation in the stock market. Now people are talking about gas prices and inflation.”

Patrick Cooke, 57, is one of those investors who says he has pulled back from the market. 

“It was fun for a while, things were going up and down pretty fast,” he said of stock trading. 

Mr. Cooke, who works in construction, said he has sold his dogecoin holdings while holding on to some stocks such as AMC. For the most part, he has been sitting on the sidelines while the broader market has slumped to new lows. Mr. Cooke said he just has less money to play with in the market, with sky-high costs pinching his wallet. 

“In 2020, I had some extra money,” Mr. Cooke said. “Now, whatever extra money I have, I hold on to it.”

The average retail portfolio, which includes such stocks as Apple Inc., Tesla Inc. and Visa Inc., declined 34% this year through Tuesday, according to estimates from Vanda Research. Meanwhile, individual traders’ activity in bullish call options has fallen to some of the lowest levels of the past two years, according to Deutsche Bank data. 

Some stocks can still fluctuate based on the sentiment of the meme-stock crowd. Shares in Bed Bath & Beyond Inc. and AMC Entertainment Holdings Inc. skyrocketed in August after individuals purchased stocks and bullish call options, though those gains have been erased since then.

Kevin Cai, 25, said he jumped into the market during the March 2020 crash, scooping up shares of pandemic winners including DraftKings Inc. and Chewy Inc. He eagerly funneled most of his paychecks into his Robinhood account, which quickly swelled as stocks crested to dozens of highs that year. 

The Robinhood app’s frequent notifications kept his mind on his stock portfolio. Since then, he said he has pivoted to investments in I bonds, or inflation-adjusted U.S. savings bonds, and broad exchange-traded funds tracking markets. He said he thinks that stocks will eventually recover and that steadily putting money into index funds is a sound strategy. 

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There is “less anxiety over market drops and I don’t check my positions endlessly,” said Mr. Cai, who lives in Boston.

Robinhood, which doesn’t report its third-quarter earnings until next month, has been cutting costs in response to lower volumes. In August, the company said it would cut about 23% of its full-time staff, its second round of layoffs this year, citing “additional deterioration of the macro environment,” including what has been a 40-year high in inflation.

“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the Covid era would persist into 2022,” Mr. Tenev wrote in an August blog post. “In this new environment, we are operating with more staffing than appropriate.”

Write to Peter Rudegeair at peter.rudegeair@wsj.com and Gunjan Banerji at gunjan.banerji@wsj.com