Economic contraction probably has already taken hold in some states, including California, analysts say. Hopes that the economy could shake off the sub-prime mortgage mess and dodge recession grew fainter Friday as the Labor Department reported that U.S. employers last month added the smallest number of new jobs in more than four years -- driving the unemployment rate to a two-year high of 5%.

NEW YORK -- U.S. stock futures turned modestly higher Thursday after a private employment reading showed a rise in jobs for December, easing some concerns about the economy a day before the Labor Department's key reading on employment.