NEW YORK (AP) -- A rout in retail stocks pulled U.S. indexes down on Wednesday. Macy's, the largest U.S. department store chain, slashed its annual profit forecast after it reported a steep drop in earnings. Office Depot and Staples took big losses after a judge blocked their plans to merge.
Macy's had its biggest one-day loss since 2008, and its troubles dragged down department store, clothing, jewelry and accessories companies. Coming off their biggest gain in two months, stocks were lower all day, and most parts of the market slumped. Health care stocks took some of the biggest losses.
Utilities companies traded higher as bond prices rose and yields fell, and energy companies rose with oil prices. The price of oil climbed after the U.S. Department of Energy surprised investors by reporting that oil stockpiles shrank last week, and production also fell.
Retailers have a lot to worry about, said Kate Warne, investment strategist for Edward Jones. Competition within the industry is getting more intense as stores deal with more Internet-based competition and sell bigger ranges of products to keep shoppers from going elsewhere. Meanwhile, higher oil prices could push up the cost of gas and crimp consumer spending.
"Consumers aren't spending the way they used to spend, especially on apparel, and they're not spending as much at the mall," Warne said.
The Dow Jones industrial average sank 217.23 points, or 1.2 percent, to 17,711.12. The Standard & Poor's 500 index fell 19.93 points, or 1 percent, to 2,064.46. The Nasdaq composite index lost 49.19 points, or 1 percent, to 4,760.69.
Macy's fell to its lowest price since December 2011 after it posted disappointing sales and said shoppers spent less on clothes and international tourists spent less. Macy's also sharply reduced its annual profit forecast. The stock sank $5.61, or 15.2 percent, to $31.38.
Retailers including Michael Kors, Nordstrom, Kohl's and Tiffany also took big losses. Watch and accessories maker Fossil Group also disclosed disappointing sales and said conditions have gotten worse. It cut its projections for the year, and its stock dropped $11.66, or 29.1 percent, to $28.44.
Office Depot and Staples plunged after calling off their proposed merger. A federal judge ruled that competition for office supplies would be reduced if the largest office-supply chain combined with the second-largest, supporting the government's effort to stop the $6.3 billion deal. Office Depot nosedived $2.46, or 40.4 percent, to $3.63 and reached its lowest price in three years. Staples skidded $1.90, or 18.3 percent, to $8.46.
Online rival Amazon, which is trading at all-time highs, rose $10.16, or 1.4 percent, to $713.23.
Already trading at its highest price in six months, benchmark U.S. crude rose again after the government reported a surprise decline of 3.4 million barrels in supplies for last week. Analysts were expecting an increase. U.S. oil production also fell, and is down 6 percent compared to a year ago.
U.S. crude rose $1.57, or 3.5 percent, to $46.23 a barrel in New York. Brent crude, the international benchmark, jumped $2.08, or 4.6 percent, to $47.60 a barrel in London.
Energy companies also traded higher. ConocoPhillips rose 81 cents, or 1.9 percent, to $43.68 and Halliburton gained 70 cents, or 1.8 percent, to $39.54.
Disney posted weaker-than-expected earnings and sales. Its parks and consumer products divisions didn't do as well as analysts hoped, and the company said it's discontinuing its Disney Infinity video game line because the changing market is too risky. Its stock lost $4.31, or 4 percent, to $102.29.
Video game maker Electronic Arts' quarterly profit and sales were far stronger than expected, and it gave a strong forecast for its current fiscal year. The stock jumped $8.84, or 13.7 percent, to $73.38.
Drug companies traded lower as regulators continued to scrutinize their business practices. Merck and Johnson & Johnson both said the U.S. Attorney's Office for the Southern District of New York is looking into their relationships with pharmacy benefits management companies, which handle drug benefits for insurers and other health care beneficiaries.
Endo Pharmaceuticals, which makes the pain drug Percocet, disclosed a similar inquiry earlier this week and its stock lost $1.97, or 12.7 percent, to $13.55. Vertex Pharmaceuticals fell $5.45, or 6.1 percent, to $83.63.
Pet food maker Blue Buffalo Pet Products advanced after it reported strong quarterly results and boosted its sales forecast for the year. The stock added $1.93, or 8.1 percent, to $25.81.
Fast food chain Wendy's raised its annual projections after reporting strong first-quarter results, but cautioned that a key sales measurement won't meet its expectations in the second quarter. The stock gave up 99 cents, or 8.9 percent, to $10.19.
In other energy trading, wholesale gasoline rose 10 cents, or 6.4 percent, to $1.58 a gallon. Heating oil increased 6 cents, or 4.4 percent, to $1.40 a gallon. Natural gas rose 2 cents to $2.17 per 1,000 cubic feet.
The price of gold rose $10.70 to $1,275.50 an ounce. Silver gained 23 cents, or 1.3 percent, to $17.32 an ounce. Copper picked up 1 cent to $2.10 a pound.
Germany's DAX slid 0.7 percent and France's CAC 40 was 0.5 percent lower. Britain's FTSE 100 rose 0.1 percent. Japan's Nikkei 225 edged up 0.1 percent, while South Korea's Kospi fell 0.1 percent.
Bond prices rose. The yield on the 10-year U.S. Treasury note fell to 1.73 percent from 1.76 percent. The dollar fell to 108.49 yen from 109.30 yen. The euro rose to $1.1425 from $1.1370.