NEW YORK (TheStreet) -- Equity strategists are warning that the U.S. bull market is aging and that better opportunities may lie abroad. As U.S. stocks have surged in 2013, fund managers are questioning whether equities can go much higher.
The S&P 500 has gained 26% in 2013, poised for its best year since 1997. But when looking at the outlook for corporate spending, some fund managers are questioning whether the benchmark will more high in 2014 than somewhere in the single-digits.
U.S. shares have gained around 164% since October 2008 when the government announced its troubled asset relief programs to prop up financial institutions at risk of failure. Once-cheap valuations have returned to their long-term averages, while earnings growth trails the expansion in multiples. The likelihood the central bank will reduce its bond-buying program in coming months is viewed as a further risk to shares, which have seen their attractiveness bolstered relative to other asset classes.
"We are seeing signs of caution in the market," John Linehan, T.Rowe Price's head of U.S. equities told a media briefing this week.
He pointed to tepid revenue growth, historically high profit margins and market performance fuelled by multiple expansion. "Our green light on equities is turning to yellow," Linehan added. On the flipside, he acknowledged that lower energy prices and a pick-up in U.S. manufacturing were supportive for high single or low double-digit equity gains in 2014.