Shares of Jefferies Financial Group Inc. (JEF) plummeted 10.32% in intraday trading on Thursday after the investment bank reported disappointing first-quarter earnings that fell short of Wall Street expectations. The significant miss has raised concerns about the broader investment banking sector's performance in the face of challenging market conditions.

Jefferies reported earnings of 57 cents per share for the fiscal first quarter, well below the analysts' consensus estimate of 94 cents per share. The company's revenue also disappointed, coming in at $1.59 billion, missing estimates by 13.66% and declining from $1.74 billion in the same quarter last year. The poor results were primarily attributed to weakened bond trading and stalled deal activity.

Brian Friedman, President of Jefferies, explained that the momentum from last year "has been slowed by the uncertainty that has arisen as a result of the policy statements and actions of the government and geopolitical events." The company experienced a sharp 39% decline in revenue from equity underwriting, highlighting the challenging environment for capital markets activities.

The disappointing results from Jefferies, often seen as an early indicator for Wall Street's performance, have stoked fears about the upcoming earnings reports from larger rivals such as Morgan Stanley, Goldman Sachs, and JPMorgan Chase. Investors are now concerned that the long-awaited recovery in investment banking may be slower and more uneven than previously anticipated.

As geopolitical tensions and rapidly evolving U.S. policies continue to create uncertainty, the investment banking sector may face headwinds in the coming months. The Jefferies report suggests that the impact of these factors on deal-making and trading activities could be more significant than initially expected, potentially leading to a reassessment of growth forecasts for the industry in 2025.