Stocks may be recovering but market angst is quickly spreading -- and not just in the professional ranks.

Retail traders are now the least bullish on the U.S. stock market since December, when the S&P 500 sank to a 20-month low, according to a weekly survey by the American Association of Individual Investors. Bearish bets have also been increasing, climbing to the highest since the start of the year.

Mom and pop traders are joining asset managers in dialing back optimism over the ability of U.S. equities to keep rallying. And although stocks are staging a rebound this week after falling in May, many money managers are flocking to safer instruments, including bonds and defensive equities.

Red flags are popping up in different corners of the market. Deutsche Bank AG strategists noted on May 31 that rising put-call volume ratios as well as retail sentiment deterioration “approaching extremes” signal downside risks for U.S. stocks. For six weeks in a row, money managers have reduced their stock holdings, the longest streak of selling since June 2011, when the market was mired in the sovereign-debt crisis.

U.S. equity funds have been seeing significant outflows, losing $8.4 billion in the week through May 29 just as investment-grade bonds whetted investor appetite, according to EPFR Global data.

It’s a challenging time for investors, who are trying to navigate trade-tariff headlines, negative-yielding debt and near-record premiums for defensive stocks. Their fears can come alive as soon as this month if the U.S. Federal Reserve fails to cut rates -- a market bet that is partially responsible for this week’s market enthusiasm.

If the U.S. monetary authorities hold off on acting now, a plunge similar to that of December could emerge, according to Masanari Takada, a quant strategist at Nomura Securities Co.