NEW YORK (Reuters) - A U.S. stock rally fueled by optimism President Donald Trump will boost the economy may be near its peak, according to a Reuters poll of strategists who forecast U.S. shares will gain less than 3 percent between now and year-end.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 27, 2017. REUTERS/Lucas Jackson

The run up since the Nov. 8 U.S. election has left the S&P 500 .SPX at levels many consider overvalued, and some strategists say a lot depends this year on whether the new administration will be able to push through tax reform and other changes.

Republican leaders late on Friday pulled their legislation to overhaul the U.S. healthcare system, dealing a setback to Trump in his first legislative initiative.

Some investors have seen the failure of the bill as a way to move forward action on tax reform, but last week’s wrangling over the bill caused stocks to stumble.

In its post-election rally, the S&P 500 rose as much as 12 percent, hitting an intraday high of 2,400 on March 1. It is now up around 9 percent since the election.

Based on the median forecast of over 40 strategists polled by Reuters over the past week, the S&P 500 will hit 2,355 by mid-2017 and finish the year at 2,425, just 2.8 percent above where the index closed on Tuesday but up about 8 percent from 2016.

The S&P 500 is already up about 5 percent in 2017.

Julian Emanuel, executive director of U.S. equity and derivatives strategy at UBS Securities in New York, said stocks have been pricing in a “strongly” pro-growth agenda.

“But it has yet to be fully implemented, and the devil is in the details of implementation,” said Emanuel, who sees the S&P 500 ending this year at 2,300 and said he is “cautious” on stocks near term.

At the same time, the poll’s median forecast is up from the December poll’s 2,350, and some banks have bumped up targets substantially. Credit Suisse raised its year-end 2017 S&P target to 2,500 from 2,300.

Some strategists remain upbeat on some of the biggest beneficiaries of the Trump rally including financials, and many expect stronger economic growth to help earnings more than anything else.

The S&P 500 is trading at nearly 18 times expected earnings, well above its long-term average of 15, Thomson Reuters data shows.

While analysts expect S&P 500 profit growth of 10.9 percent this year - a big increase over 2016’s 1.4-percent growth, according to Reuters data - investors worry whether it will be enough to justify current prices.

Of all Trump’s election promises, tax reform could have the biggest impact on earnings, so “if we get corporate tax reform light, that could disappoint,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Interest rates are expected to continue to rise this year, which could be another factor limiting stock gains if the pace of rate hikes is faster than Wall Street is planning.

The U.S. Federal Reserve raised rates this month, and Wall Street’s top banks see two additional rate hikes this year, a separate Reuters poll showed.

Most respondents in the stocks poll said a 10-percent S&P correction before mid-year is unlikely, while they were roughly split over whether there will be one by year-end.

The last 10-percent correction in the S&P 500 was at the start of 2016.

The Dow Jones industrial average is projected to end 2017 at 21,250, about 3 percent above Tuesday’s close, the poll showed.