Wall Street retrenched Monday, closing sharply lower as investors showed their cautious side and cashed in profits from the market's best...

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NEW YORK — Wall Street retrenched Monday, closing sharply lower as investors showed their cautious side and cashed in profits from the market’s best week in nearly five years.

Given the scope of last week’s gains, a pullback Monday wasn’t unexpected and perhaps reflected the normal ebb-and-flow of trading.

The Dow Jones industrial average fell 108.03 to 12,635.16.

Microsoft, one of the 30 Dow stocks, fell 26 cents to close at $30.19 a share. Boeing, also a Dow stock, added 14 cents to $82.90.

Broader stock indicators also lost ground. The S&P 500 index fell 14.60 to 1,380.82, and the Nasdaq fell 30.51 to 2,382.85.

The Dow is 10.8 percent below its record close of 14,164.53 set Oct. 9 but is up 8.6 percent from the 15-month lows it hit in January. The Federal Reserve’s second interest-rate cut in about a week helped boost stocks last week.

“It’s not like all of our problems went away because the market was up a couple of days last week. There are still some problems hanging over,” said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles.

He said investors chiefly remained concerned about the labor market — given the huge effect of consumer spending on the economy — and on the feasibility of efforts to aid struggling bond insurers.

The session’s move lower continued even after a Commerce Department report showed that orders at U.S. factories rose by 2.3 percent in December — the biggest increase since July. Analysts had been expecting a 2 percent increase after a 1.7 percent gain in November.

While stocks showed little reaction to the factory orders report, Wall Street remains eager for any clues about the nation’s economic health. It continued to watch earnings reports trickle in; the readings could help indicate whether Wall Street last week carved the beginnings of a sustainable recovery.

Last week, the Dow Jones industrial average jumped 4.4 percent, the Standard & Poor’s 500 index gained 3.8 percent, and the Nasdaq composite index advanced 4.9 percent.