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MIDDAY MARKETS: Nasdaq still sees red

Technology stocks were still sullen at midday as signs of weakness in Europe outweighed the day's good news.

The Nasdaq slipped 1.75 points to 1,852.38, and the Dow Jones industrial average gained 39.69 points to 9,825.04. The Inter@ctive Week @Net Index fell 24 points to 163.89.

The Nasdaq remained stuck in the red following a steep decline on Nortel (NSYE:NT) and Palm (Nasdaq: PALM) warnings Wednesday. By midday Thursday, Nortel was still down 25 cents to $13.75, while Palm rose 16 cents to $8.22.

"Yesterday's market was a disappointment. I had hoped most of the negative news that came out was already in stocks, but apparently the market still reacts to bad news and the rallies on good news are just a one-day flash in the pan," Lance Zipper, managing director of equity trading at Brean Murray & Co told Reuters.

Another indicator that the economy hasn't reached its turn-around came from Tech Data's (Nasdaq: TECD) profit warning. The company's outlook for the first quarter raised doubts about Europe's economic health and sparked some concern on Wall Street Thursday. But shares gained $2.44 to $28.75 as analysts praised the long-term prospects of the stock.

The market had a couple of pieces of good news Thursday. Economic reports indicated that unemployment isn't as bad as expected. First-time claims for state unemployment benefits fell sharply last week, the Labor Department said. In a preliminary Reuters poll, U.S. economists predicted the March unemployment rate would rise.

Cabletron Systems (NYSE: CS) gained $1.70 to $12.70 on a positive report. The company is one of few in its sector that's managed to please analysts, topping fourth-quarter results by a penny Wednesday, and announcing that it's comfortable with first-quarter estimates.

SafeNet (Nasdaq: SFNT) was the Nasdaq's biggest loser. The stock was chopped in half, down $18.69 to $14.69 after it announced that first-quarter revenue and earnings will miss Wall Street's estimates by a long shot.

Amazon (Nasdaq: AMZN) lost 7 cents to $10.73. AOL Time Warner (NYSE: AOL) fell 40 cents to $40.36, and Yahoo (Nasdaq: YHOO) fell 31 cents to $14.63.

Cisco Systems (Nasdaq: CSCO) was unchanged at $15.75, Intel (Nasdaq: INTC) rose 18 cents to $27.13, Oracle (Nasdaq: ORCL) fell 29 cents to $14.81 and Microsoft (Nasdaq: MSFT) was up 94 cents to $56.50.

ZDII staff and Reuters contributed to this roundup.