More Videos:

Stocks Just Can't Go Higher as Strategists Urge Bull Market Caution

Tickers in this article: ^DJI ^GSPC

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.

Some predict that weak capital expenditure will contribute to a backdrop where other markets outpace the U.S. "We have moved away from the US being the leader for equity markets to Asia and Europe in 2014," StateStreet Global Advisors chief investment officer Daniel Farley told a media briefing this week.

He expects US equity markets to be 6 to 7% higher next year with Europe moving from negative to positive growth. In Asia, Farley's favorite market is Japan, where the Nikkei's rally has been largely due to foreign investment. The CIO notes that nascent demand from local investors will likely propel that market further. "The government pension fund is only 10% invested in Japanese equities and has been vocal at aiming to lift that," he said. "We expect other institutions to follow."

Paul Mangus, head of equity research and strategy for Wells Fargo Private Bank, agrees that capital expenditure will be key for U.S. shares. This refers to investment corporations must make in infrastructure and hiring for long-term growth.

"We expect earnings growth of around 5% but will pay close attention to capital expenditure - it varies by industry and we are looking for further evidence of it [across the board]," the Charlotte-based manager said in a phone interview.

He said signs of stabilization in Europe had prompted many foreign investors to sell U.S. equities in recent months as they tried to ride the region's nascent economic recovery. But Mangus still expects the U.S. to outperform other developed nations and emerging markets next year.