Double-digit losses by retail giant Macy's dragged down the S&P 500's consumer-discretionary sector on 11 May. Reuters

US stocks closed in the red on Wednesday 11 May, erasing nearly all gains from the last session, following disappointing Disney and Macy's returns. The SPDR S&P Retail ETF (XRT) posted its worst day since 18 August 2011 after it dropped 4.44%. The drop in consumer-discretionary stocks offset a 4% rise in oil prices.

The Dow Jones plunged 217.23 points, or 1.2%, to settle at 17,711.12. Losses were led by Walt Disney Co's 4.04% selloff and a 3.7% decline in Nike Inc, noted MarketWatch. Only one of the 30 blue-chip stocks—Microsoft Corp—closed in positive territory. Drops in Wal-Mart, Home Depot and Nike stocks also weighed on the Dow.

The S&P 500 sank 19.93 points, or 0.96%, to close at 2,064.46, led by double digit declines in retailers Macy's Inc and Michael Kors Holdings Ltd. Nine of the index's 10 main sectors closed in the red. The index posted its worst day since 7 April, CNBC reported.

Meanwhile, the Nasdaq Composite dropped 49.19 points, or 1%, settling at 4,760.69.

"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 non-traditional retailers online," Efraim Levy, senior equity analyst at Standard and Poor's, told CNBC.

According to MarketWatch, the stock market rally on Tuesday 10 May surprised investors who continue to be concerned about corporate growth and economic sluggishness overseas. In fact, some market analyst attribute the declines in stocks on 11 May to the belief that the previous day's gains were excessive.

US crude oil futures rose $1.57 (£1.09; €1.37), or 3.52%, to settle at a six-month high of $46.23 (£32.00; €40.46) a barrel. Oil traded higher to extend gains following the EIA's weekly inventory report that revealed a decline of 3.4m barrels, CNBC reported. "Oil closed at a new high for the year. ...That would have translated into a good stock market but earnings (are) finally catching up to the stock market," Peter Cardillo, chief market economist at First Standard Financial, said.

The US dollar index traded about half a percent lower, with the euro last near $1.143 and the yen around 108.4 yen against the greenback. Treasury yields fell, with the 2-year yield around 0.72% and the 10-year yield near 1.73%.

Gold futures for June delivery surged $10.70 (£7.41; €9.36) to settle at $1,275.50 (£882.82; €1116.17) an ounce.

Overseas, underperforming bank stocks led European stocks to close around half a percent lower or more. In Asia, stocks closed mixed with the Nikkei 225 and the Shanghai Composite closing up and the Hang Seng dropping 0.9%.