NEW YORK (Reuters) - A surprisingly sharp rebound in the economy and earnings will drive further gains in U.S. stocks this year, though the S&P 500 is likely to end 2021 less than 6% up from its current level, according to a Reuters poll of strategists. The benchmark S&P 500 ended pandemic-hit 2020 with gains of 16.3%, lifted late in the year by optimism over the rollout of COVID-19 vaccines and prospects of more U.S. fiscal stimulus. The index, which is up about 3% so far this year, will finish 2021 at 4,100, a 5.6% gain from its close Tuesday of 3,881.37, according to the median forecast of 50 strategists polled by Reuters over the last two weeks. The index is expected to be at 4,000 by end-June - though with some strategists warning of a possible surge in inflation, many viewed a correction in stocks in the next six months as likely or very likely. Progress in distribution of the coronavirus vaccine coupled with President Joe Biden’s proposed $1.9 trillion package for pandemic relief have boosted the outlook for the economy and earnings. “There’s a systematic underestimation of the economic and earnings forecasts for the last nine months,” said Jonathan Golub, chief U.S. equity strategist and head of quantitative research at Credit Suisse Securities. “Everywhere I look, there’s upside,” added Golub, who on Tuesday raised his year-end 2021 target on the S&P 500 to 4,300. Based on the poll, the Dow Jones industrial average will finish this year at 32,970, up 4.5% from Tuesday’s close. Federal Reserve Chair Jerome Powell, testifying before the U.S. Senate Banking Committee on Tuesday, said coming updates to the Fed’s outlook may show the economy expanding “in the range” of 6% this year. At the same time, earnings have been much stronger than expected. U.S. companies are on track to post earnings growth for the fourth quarter of 2020, defying expectations for profits to have dropped due to the pandemic, according to I/B/E/S data from Refinitiv. For 2021, Wall Street analysts expect S&P 500 earnings to jump 23.3%. Asked when earnings would return to pre-COVID-19 levels, most respondents in the poll said it would happen within six months. In the November poll, most respondents said that would happen within a year. Yet the Fed’s accommodative stance along with the federal fiscal support and a sharp rise in benchmark Treasury yields have triggered inflation concerns, and some investors have taken profits in market-leading technology stocks. Another worry is the risk of higher taxes as the economy accelerates, said Golub, noting that high levels of growth in earnings and the economy “are not going to be sustained forever.” Many strategists still favor cyclical stocks, which investors dumped during the early part of the pandemic. “Higher bond yields aren’t turning us bearish on the year,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, wrote in a report this week. She is overweight financials, materials and energy and has an end-2021 target on the S&P 500 of 4,100. “What the increase in yields does do, in our view, is provide another justification for rotation out of defensives and secular growth.” (Other stories from the Reuters Q1 global stock markets poll package:)