Professional investors have been selling U.S. stocks at one of the fastest rates on record over the past three months, with institutional investors notably reducing their holdings in energy and technology sectors while increasing allocations to utility stocks and government bonds. Hedge funds' long/short ratio on U.S. equities has dropped to its lowest level in at least five years, reflecting persistent pessimism despite recent rallies in the S&P 500. Additionally, 20% of 174 fund managers surveyed by Bank of America, managing $458 billion in assets, reported being underweight the U.S. dollar—the highest level in 19 years. Similarly, 18% of these managers were underweight global technology stocks, marking the most bearish stance since the 2022 bear market. Meanwhile, expectations for a global recession have sharply declined; only 1% of institutional investors now consider a global recession likely, down from 42% in April. Market-implied odds of a U.S. recession in 2025 have also decreased significantly, falling from a peak of around 70% earlier this year to approximately 36-39% as of mid-May, according to prediction markets such as Kalshi and Polymarket. Despite these reduced recession probabilities, professional investors' positioning in U.S. equities remains cautious, with funding spreads indicating low demand for long positions. Net underweight allocations to U.S. equities reached around 38-40% in early May, the lowest since 2023 and the lowest outside of the 2023 period since before the 2008 financial crisis.