A $1,000 investment in SPY now will be worth the same if it hits the year-end price target: how do the returns compare to those? Big Tech

The market has shown signs of recovery in recent sessions, prompting many analysts to call for a bottom. That said, short to medium-term visibility is limited, given the uncertainty surrounding inflation and interest rates.

Uncertainties weigh down: The SPDR S&P 500 ETF Trust SPY, an ETF that tracks the S&P 500 index, is currently down around 12% since the start of the year. The current market downturn is led by the technology sector. The Invesco QQQ Trust QQQ, which tracks the Nasdaq 100 index, fell about 19%.

At one point in mid-June, the SPY was down 23%, but managed to pare its losses. At its trough, the QQQ had fallen about 32%.

The underperformance of the so-called "Big Techs" is not surprising. Some of them are heavily exposed to consumer spending, which has notably slowed due to recession fears and soaring inflation that has eaten away at nominal spending. Meanwhile, social media platforms have suffered from weak ad spend, which is their main source of revenue.

Read Benzinga's coverage of the July jobs report and his Fed rate reading

What's in store for us in the near term: Given the underperformance since the start of the year, in all likelihood the market should rally. Valuations for most stocks, even fundamentally sound ones, have become attractive, which should attract bargain hunters.

The economy is now the dark horse. Nonfarm payrolls data released on Friday showed the economy added a healthy 538,000 jobs in July. And there were upward revisions to the previous two months' numbers, which boosted employment gains for the first seven months of the year by 26,000.

The earnings season was better than expected.

The sore spot is economic growth, which has been negative for two consecutive quarters - technically defined as a recession.

Inflation remains stable at multi-decade highs. The Fed, which raised the fed funds rate from 0% to 0.25% at the start of the year to 2.25% to 2.5% in July, has no choice but to keep rising rates until inflation is brought under control.

In this context, the fate of the stock market is left to the mercy of every incoming data.

Although analysts have tempered their expectations for the market and equities, they are still hopeful that things will improve in the second half. The average year-end price target for the S&P 500 is currently at 4,372, according to CNBC's compilation of market strategists' price targets. This would mean that the index would end up falling by 8.3%.

Returns from a Broader Market by Year-End: Assuming the SPY sees the same decline as the S&P 500, it's on track to end the year at $432. A $1,000 investment in SPY will currently yield 2.4 units of the ETF. This would be worth 1,036.8 at the end of the year, a gain of 3.68%.

Here's how it compares to the potential returns of big tech, assuming they hit the consensus price target (compiled by TipRanks):

Meta Platforms, Inc. META: +35.4%Netflix, Inc. NFLX: +1.1%Apple, Inc. AAPL: +8.93%Amazon, Inc. AMZN: + 25%Alphabet, Inc. GOOGLGOOGL: +21.5%Microsoft Corporation MSFT: +16.4%

SPY closed Friday's session at $413.47, down 0.17%, according to data from Benzinga Pro.

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.