Complex sentence: During the artillery duel, Stuart received an erroneous report that Federals where approaching the Confederate rear from Mountville, and thus neglected to give chase and turned his force to meet the phantom threat in his rear.
Split into simpler sentences: During the artillery duel, Stuart received an erroneous report that Federals were approaching the Confederates' rear from Mountville, and thus he neglected to give chase. Instead, he turned his force to meet this phantom threat in his rear.