2012 is half over, and the stock market has had an up-and-down start to the year. The market rose as much as 13% in the first three months of the year only to run into a crazy May, which saw the market drop 18 of 22 trading days. In recent weeks, the negative sentiment has faded a bit, and as we stood at the beginning of the day, the market is up a respectable 8.4%.

In the series I'll preview today, my fellow Fools and I will help uncover what's happened in the first half of 2012 and what to expect for the rest of the year.

What's happened?
The slow economic recovery that we've experienced for nearly three years slowed to a crawl in the first half of 2012. GDP rose 1.9% in the first quarter, and economists expect it to rise just 1.4% in the second quarter, the slowest rate since the first quarter of 2011. Economic and fiscal trouble in Europe has been a drag on the U.S. recovery, and even slowing growth in China is having an impact on us here at home.

The uncertainty has led to falling energy prices, a silver lining when the economy falters. Oil peaked above $110 per barrel in February but fell below $80 for a short time last month and now stands at about $89 per barrel. Natural gas has also fallen to lows people didn't think were possible, reaching below $2/MMBtu in April. All of this has driven the terrible performance of energy stocks from coal to natural gas to oil. Chesapeake Energy (NYSE: CHK) took many of the energy headlines in the first half of the year, in part due to production cutbacks because of prices, and in part because of the revelation of conflicts of interest and a number of other issues with the company's CEO and board.

The tech sector has had an up-and-down year. Apple (Nasdaq: AAPL) hit a new high earlier this year, but it is still an outlier in the sector. Some big names continue to struggle, including HP (NYSE: HPQ), which hit a new 52-week low just this morning, and even Microsoft, which can't seem to catch up with Apple in tablets or smartphones. Pile on the disastrous Facebook (Nasdaq: FB) IPO and you've had a rough ride for tech stocks so far in 2012.

Retailers have had a tough time dealing with the slow economy and increased competition. Best Buy (NYSE: BBY) has been the poster child of the industry's challenges -- posting massive losses, losing its CEO, and announcing a major strategic shift. The Internet and discount retailers have made the environment challenging, piling on top of the rough economy.

What's going to happen?
If you're anything like me, you're already sick of it, but the election is going to be the No. 1 news item to follow in the second half of 2012. When the political rhetoric is as heated as it is this year, the government almost grinds to a halt, and this is especially problematic heading toward a "fiscal cliff" and the painful but very important debt ceiling limit.

The implications of these two events aren't small to the U.S. economy and, by extension, our investments. The last time Congress played chicken with the debt ceiling, the U.S. almost defaulted and we lost our AAA debt rating. It was likely no coincidence that GDP growth also dropped as uncertainty rose. The election will likely happen before the debate really heats up, but this throws policy, and in turn businesses, into a period of uncertainty. And if there's one thing the market doesn't like, it's uncertainty.

While a U.S. default could throw the entire country into turmoil, the fiscal cliff is a different debate that likely has more impact on your day-to-day lives. The Bush era tax cuts are set to expire on Jan. 1, and if they do, taxes will go up for everyone.

Part of the fiscal cliff is also a big cut in defense spending. As part of the last debt ceiling deal, $600 billion in defense spending cuts over the next 10 years and $55 billion in cuts will hit next year alone. Higher taxes and lower spending would have a positive impact on the deficit, but both would have a negative impact on the economy in the short term -- and if both hit at the same time, there's a chance it could tip us over into recession territory.

To add even more complexity to the situation, more provisions of Obamacare will be put in place next year and will hit medical companies in the second half of 2013. Medical devices and even investment income will be affected next year, so companies will be preparing for the rollout. Meanwhile, those who oppose Obamacare in Congress will try to prevent it from being implemented, complicating matters for companies, investors, and policy makers as 2013 approaches.

Our look in the rearview mirror and our crystal ball
Over the next week, my fellow Fools and I will provide our reviews of the first half of 2012 and preview what we see in the second half for a number of important sectors.

Check out the rest of our sector analysis:

For more stock picks from companies that should benefit from the second half of the year's biggest event -- the election -- check out our free report "These Stocks Could Skyrocket After the 2012 Presidential Election."