Wall St report: Tues mid-session

TECHNOLOGY stocks clung to gains and blue chips dipped in midday trading as investors focused on a swell of merger activity and braced for the summer flood of quarterly earnings reports.

A buying spree on Monday drove the Nasdaq Composite Index to its highest level since May 2002. Investors were still hungrily snapping up technology shares, today.

EMC was in the spotlight after it said it would buy Legato Systems for $1.3 billion in stock.

The Dow Jones industrial average slipped 26.05 points, or 0.28% to 9,190.74. The Nasdaq Composite Index was up 8.73 points, or 0.51% at 1,729.44.

Pepsi Bottling Group helped underpin the market with a gain of nearly 6% after it produced earnings in line with estimates, despite having sales of its cold drinks hit by unseasonably cool spring weather. Its shares rose $1.19 to $21.92.

General Motors rose 83 cents, or 2.3% to $36.73. The auto maker extended hefty cash rebates and interest-free loans on most of its vehicles until August. But AT&T, down 40 cents, or 2% at $19.59, dragged on the Dow after a revenue warning from bankrupt WorldCom fanned fears of pricing pressure in the industry.

EMC's bid for Legato, a deal that EMC said would expand its portfolio of storage software, sent EMC's shares down 43 cents, or 3.7% to $11.31 and pushed Legato's shares up 90 cents, or 9.9% to $10.

Dana surged 35% after auto parts maker ArvinMeritor said it launched a $2.2bn hostile cash bid for its rival in a bid to cut costs and broaden its product range. Dana rose $4.21 to $16.23.

Trucking company Yellow said it would buy rival Roadway for $966m to create one of the largest shipping companies in the world. Yellow slumped $2.14, or 9% to $22.35, while Roadway surged 52% or $15.53, to $45.55.