Technology stocks took a well-deserved breather this morning, while blue-chips began the heavy task of digging out from under yesterday's rubble, leaving major proxies broadly mixed at midday.

The

Nasdaq Composite Index

was down 32, or 0.7%, to 4816, while the

Dow Jones Industrial Average

was up 57, or 0.6%, to 9853. The blue-chip measure is still smarting from yesterday's 374-point beating, sparked by an earnings warning from

Procter & Gamble

(PG) - Get Report

. The small-cap

Russell 2000

sided with the Comp, down 8, or 1.4%, to 587, while the broader

S&P 500

took its cue from the Dow and added 5 to 1361.

The Dow's modest strength was scattered among a handful of stocks, and sectors were showing less than a unified front. Among financials, for instance,

J.P. Morgan

(JPM) - Get Report

was rising 1.1%, while

American Express

was off 2.5%.

Procter & Gamble was still feeling the pain from yesterday's news, down 4.2%, while

Johnson & Johnson

(JNJ) - Get Report

was shining 3.2%.

The Dow's dive in recent days is troubling even bullish observers. "The downside momentum has gained some speed," said Peter Da Puzzo, president of

Cantor Fitzgerald

. "If the Dow can't get back up through 10,000 in the next few days or so, the slide will probably bring the Nasdaq down," he said.

Still, Da Puzzo said that with the exception of P&G's warning, he is expecting solid earnings reports and also thinks there is still a lot of money out there in mutual funds and individual hands. "Basically I'm bullish but selective."

Selective seems to be the watchword going forward. "We've continued to lack leadership, except for tech," said Steven Goldman, market strategist at

Weeden

in Greenwich, Conn. "The groups that have generally rallied have been those that have been oversold. I think it's a wake-up call there are no safe havens. It will be a choppy and defensive road, until evidence comes out that the economy is slowing."

Stocks that took a beating yesterday were fighting back today. A retreat in oil prices was giving transportation stocks some gumption, with the

Dow Jones Transportation Average

rising 2.7% after yesterday's downturn. Health-care stocks were also showing some muscle after yesterday's punishment, with the

American Stock Exchange Pharmaceutical Index

soaring 5.7%.

"The drugs are really overdone and I think its really going to turn around," predicted Da Puzzo, who thinks the disconnect between drug stocks and their recently on-fire biotech brethren is strange. "There is a huge divergence, but its not like the biotechs have to come down. The successful drugs have to be sold to the drug companies."

Action in techland was also all over the map today, with pockets of strength popping up amid mostly subdued action.

Ariba

(ARBA)

and

i2 Technologies

(ITWO)

were gaining on news of a B2B alliance with

IBM

(IBM) - Get Report

. Meanwhile

Network Solutions

(NSOL)

was down 19 13/32, or 4.8%, giving back some of the boost it received on yesterday's merger news.

TheStreet.com Internet Sector

index was up 12, or 0.9%, to 1261.

The 10-year Treasury was down 1/32 to 100 29/32, its yield at 6.38%, and the 30-year Treasury also was off 1/32, to 101 12/23, its yield at 6.15%.

Market Internals

Breadth was negative on moderately heavy volume.

New York Stock Exchange:

1,263 advancers, 1,578 decliners, 711 million shares. 35 new 52-week highs, 202 new lows.

Nasdaq Stock Market:

1,466 advancers, 2,563 decliners, 1.2 billion shares. 134 new highs, 110 new lows.

For a look at stocks in the midsession news, see Midday Movers, published separately.