Shares of banks and other financial institutions rose alongside risk appetite as investors bet the U.S. reopening would proceed without a major hitch.

There's something of a "bifurcated" market because of conflicting views about the progress of the pandemic, said Oliver Pursche, an independent market strategist.

While some investors are buying economically sensitive stocks such as financials, others are still driving up the prices of Treasurys, reflecting serious doubts about the economic outlook. That means that markets will likely still respond to changes in the trajectory of the Covid-19 spread, according to the strategist.

"New hospitalizations and new deaths are critical," said Mr. Pursche.

Stock strength "is largely a bet on a relatively smooth reopening. That's not an unreasonable bet, as we know that virus activity subsides when temperatures rise. It'll be interesting to see how it plays out over the next few months."

One brokerage said fears that China's security crackdown in Hong Kong will hurt the island nation's role as a global financial center are misplaced.

"Despite international worry and criticism, the [local] stock market will likely shrug off the national security law issue soon," said analysts at brokerage Jefferies, in a note to clients.

"The escalating U.S.-China conflict could ultimately lead to the move of U.S.-listed Chinese companies to Hong Kong, as Alibaba has done." These measures could lead to a 12% increase in the market capitalization of the Hong Kong stock market, the Jefferies analysts estimated. 



  Write to Rob Curran at rob.curran@dowjones.com