• A majority of analysts surveyed by CNBC expect a 8%-22% upside for the S&P 500 in 2021.
• Fourteen of 20 analysts told CNBC that they are cautiously optimistic for the new year.
• Thirteen of 20 strategists believe U.S. dollar weakness will continue in 2021.

A narrow majority of market strategists surveyed by CNBC predict that U.S. stocks will continue to rally into 2021, with the S&P 500 rising between 8% and 22% next year from their current levels.

Twelve of 20 market strategists from major U.S.-based financial institutions who were polled by CNBC International predicted the S&P would rise to between 4,000 and 4,500 next year. The index finished Monday's session 3,691.96, just below its 2020 closing high.

Fourteen of the strategists characterized their view on stocks next year as "cautiously optimistic." Three said they were "very optimistic," and three said they were "cautious." The optimistic analysts cited hopes for continued economic stimulus in the United States and the rollout of Covid-19 vaccines, which has already begun in a handful of countries including the United Kingdom.

Four strategists predicted S&P would finish at between 3,500 and 4,000 next year, and another four expect the index to decline to the 3,000 to 3,500 range.

CNBC offered the strategists anonymity in exchange for their views. The email-based survey took place from Nov. 25 to Dec. 3.

Vaccines

The wide target range among those polled underscores uncertainty around vaccine production and distribution plans as the Covid-19 immunization process gets underway. The United States is now reporting a weekly average of more than 2,000 coronavirus deaths every day, the worst death toll since the pandemic began, according to data from Johns Hopkins University.  

But most analysts remain optimistic about the overall markets picture next year.

"We believe that as we head into 2021, the broader story will continue to be the true "reopening" of the economy in the U.S. and globally, driven by the distribution of vaccines and increase in global economic activity," said an analyst.

"In the scenario that we do see growth and earnings rebound in 2021, while rates remain low and fiscal stimulus is added to the system ... this is a favorable backdrop for risk assets broadly," that analyst continued.

Another respondent said, "We think low rates combined with a rebound in S&P 500 earnings will cause stocks to hit new highs in 2021."

Cautious optimism

Despite the ambitious targets for the index among many of those polled by CNBC, even some of the optimistic respondents said they'll closely watch how the pandemic is managed and the steps governments take to boost the economy. 

"I see 15% upside as the world comes back online. Central banks around the globe pumped in so much liquidity to help stem market collapse, that more normalized market conditions give a reason for the next leg in the bull run," said an analyst who is also watching for "delays in U.S. stimulus, next potential waves of Covid-19 and potential vaccine shortfalls."

U.S. dollar and other currencies

Strategists shared their outlooks for currencies, with only three of the group naming the U.S. dollar as their favorite from among the dollar, euro, yuan, yen and pound.

Six of 20 analysts identified the euro would deliver the best gains in 2020, while seven picked China's yuan.

"We expect the euro to be propelled both by the euro zone's rebound from a double-dip recession after the opening months of the year and by worries over lax U.S. fiscal and monetary policies along with mounting U.S. trade and budget deficits," one strategist said. "Honorable mention goes to the Australian dollar, on rising commodity prices, and the Chinese yuan, boosted by China's ongoing economic recovery."

A large institution that participated in the survey sees the yuan hitting 6.25 versus the dollar at the end of 2021. The Chinese currency last traded at 6.54 to the dollar.

Another respondent predicted that the euro zone policies will increase confidence in Europe's economic recovery after the pandemic. "I actually think that the euro will fall in the early part of next year, but in a surprise move, it will resume its recent rally throughout most of next year," he said.

"Europe is going to come out of this newest wave of the coronavirus before the U.S. and that will help them recover more quickly than the U.S.," that analyst continued. "More importantly, the ECB is going to remain more accommodative than the U.S. Federal Reserve in 2021."

Stock picks for 2021

When asked what top stocks and sectors investors would bet on for 2021, most replied that they like inexpensive "cyclical" stocks that will benefit from a post-virus reopening. Cyclical shares move with the momentum of the larger economy.

Among stocks that buy-side analysts identified as shares to buy and hold in 2021 were Exxon Mobil, Chevron, Baker Hughes, Boeing, Qualcomm, Visa and Disney.

"Qualcomm has value with a year-end 2021 target of $170 per share," said one analyst, who cited 5G in smartphones and the company gaining "Apple as a new chip customer for the new iPhones launched in the holidays of 2020."

But overall, there was little mention of tech stocks — the darlings of the market in 2020. One strategist said: "Google is still a buy with a 12-month target of $2,119 per share as it plays catch-up with other big tech with a rebound seen in ad spends as sectors like travel and tourism bounce back."

A prominent institutional investor who took part in the survey backed emerging markets over developed markets overall, projecting an 18% upside for the MSCI Emerging Market Index by the end of 2021.

CNBC International's last survey of U.S.-based strategists, conducted in August, asked for their predictions on the presidential election. Fourteen of 20 at that time predicted a win for Joe Biden.

—CNBC's Naman Tandon and Celestine Francis Xavier contributed to this article.