Last week Goldman Sachs and other Wall Street firms stated that the next three months might not be the time to buy equities. However, new reports have surfaced that may just be suggesting differently.

Wall Street, specifically Goldman Sachs and Barclays, have expressed concern regarding bipartisan gridlock and shrinking European markets that may negatively affect the equities market, one that has grown 8% since March 2012. Executives had similar concerns, as 63 members of the S&P 500 actually lowered first quarter projected earnings. The banks do believe that equities will pick back up after several months and predict that the S&P 500 will hit 1575 by the end of the year, an all time high.

There is evidence that suggests that this lull in equities growth may simply not happen. A report released this month shows that CEOs of smaller companies have grown more confident. In fact, 35% of CEOs surveyed believe the economy will be in better shape a year from now. Almost half expected a weaker economy now when surveyed three months ago. These smaller companies are not concerned with the gridlock on Capitol Hill, and instead feel that the recent performance of the economy will trump the debate around certain policy issues. More that half of the CEOs said that they are looking to employ more people and expand operations in a time when the cost of insuring employees is ever increasing.

The confidence of upper management isn’t the only thing that has risen this month. Consumer confidence levels in both the US and Europe increased. Although the consumer confidence level only inched up a little bit in Europe, any increase is considerable due to the fact that spending by consumers accounts for half of the European bloc’s economic output. The consumer confidence level in the United States climbed to 76.3, a three month high that surpassed the projected level of 74.8. It seems that US consumers have many things to be confident about: the housing market is in steady health, the economy has showed signs of growth, and unemployment has been coming down.

Despite the projections of Wall Street firms, equities may remain strong in the coming months. Increased confidence of upper management will lead to increased investment in the operations of businesses, and increased confidence of consumers, both domestically and abroad, will lead to increased consumer spending. The combination of investment and spending will foster equities and enable them to keep growing.

Sources:Goldman Sachs Simmers Down on Bullish Call, The Wall Street Journal, Feb. 11, 2013http://blogs.wsj.com/marketbeat/2013/02/11/goldman-sachs-simmers-down-on-bullish-call/?mod=WSJ_Business_LatestHeadlinesSmall Firms Plan For Stronger Economy, The Wall Street Journal, Feb. 21, 2013http://online.wsj.com/article/SB10001424127887323549204578318060856152872.html?mod=WSJ_economy_LeftTopHighlightsEuro Zone Consumer Confidence Improves in February, Reuters, Feb. 20, 2013http://www.reuters.com/article/2013/02/20/us-eurozone-confidence-consumer-idUSBRE91J0TQ20130220Consumer Sentiment in U.S. Increases to Three-Month High, Bloomberg, Feb. 15, 2013http://www.bloomberg.com/news/2013-02-15/u-s-michigan-consumer-sentiment-index-rose-to-76-3-in-february.html