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Dow closes down more than 200 points; retail plunges, posts worst day since 2011

U.S. stocks closed lower Wednesday, under pressure from disappointing Disney and Macy's earnings, amid sharp gains in oil following a surprise inventory draw.

The SPDR S&P Retail ETF (XRT) closed down 4.44 percent for its worst day since Aug. 18, 2011. The ETF is down more than 15 percent over the last 12 months. ( Tweet This )

"Stocks are down due to worries about consumer spending, which has been the mainstay of economic growth through this whole expansion," said Kate Warne, investment strategist at Edward Jones, noting the "overall view is still optimistic."

The Dow Jones industrial average had its worst day since Feb. 11 with a decline of 1.21 percent or 217 points. Disney contributed the most to declines as nearly all constituents closed lower and only Microsoft eking out gains. Declines in Wal-Mart, Home Depot and Nike also weighed on the index.

The S&P 500 closed 0.96 percent lower for its worst day since April 7. Consumer discretionary led nine sectors lower with a decline of nearly 2 percent in its worst day since Feb. 5.

"If you take Macy's, department stores and retailers are taking it on the chin right now because consumers are not spending as much as could be expected in the current economic environment and some of that spending is shifting to nontraditional retailers online," said Efraim Levy, senior equity analyst at Standard and Poor's, which has a "hold" rating on Macy's and a "buy" on Disney. He also noted negative impact from unseasonably warm weather this past winter.

Shares of Disney closed 4.04 percent lower, off session lows but posting its worst day since Jan. 15. Macy's closed down almost 15.2 percent and Fossil closed nearly 29.1 percent lower after reporting earnings.

"I don't think today's sell-off is a case of everyone running for the doors. You just have one really big stock that is weighing on the averages and a couple of smaller ones," said JJ Kinahan, chief strategist at TD Ameritrade.

Kinahan and other market analysts also attributed the declines in stocks to the sentiment Tuesday's gains were overdone.

The major stock averages initially pared losses after the mid-morning inventory report, with the Nasdaq composite trying for gains and the S&P 500 mildly lower.

U.S. crude oil futures settled...