What happened

A broad cross-section of stocks charged sharply higher on Wednesday, as Wall Street focused on Treasury yields and foreign government moves to settle unrest in the financial markets.

With that as a backdrop, a number of companies focused on the digital economy outperformed the broader markets. Shares of e-commerce kingpin Shopify (SHOP -2.37%) rose as much as 5.5%, digital payments denizen PayPal (PYPL -1.14%) jumped as much as 6.9%, and Latin American e-commerce and fintech leader MercadoLibre (MELI -0.45%) surged as much as 8.3%. When the market closed, the stocks were still far into the green, gaining 5%, 6.3%, and 7.5%, respectively. These stocks followed the broader markets higher, as the S&P 500 and the Nasdaq Composite each gained roughly 2%.

There was no company-specific news driving the gains, but shares have been pummeled over the past year, so any good news was a good excuse for fair-weather investors to wade back into the market. Positive developments in the unfolding saga involving the British pound and a spike in U.S. Treasury yields provided the catalyst.

So what

The past few days have seen a couple of dramatic developments that weighed on the major market indexes, dragging the Nasdaq Composite and the S&P 500 down to new bear market lows on Tuesday. Positive developments today fueled a broad-based rally.

The Bank of England stepped in with plans to buy U.K. government debt "on whatever scale is necessary" in a bid to "restore orderly market conditions." A collapse of the British pound earlier this week had roiled world financial markets, with the currency plunging nearly 5% Monday to a record low against the U.S. dollar, following a 3.6% crash on Friday. 

The volatility followed an announcement that the U.K. planned to implement the country's largest tax cuts in more than 50 years in an effort to curb runaway inflation.

U.S. Treasury bond yields had spiked in reaction to these developments, with the benchmark 10-year yield topping 4%, notching its highest rate since 2008. The rate influences certain interest rates, the most notable being mortgages, as the 30-year fixed mortgage rate spiked above 6% for the first time since 2008. Following the Bank of England's announcement early Wednesday, yields retreated from their historic highs, while mortgage rates advanced even higher.

Now what

So what does all this have to do with the U.S. stock market in general and these technology stocks in particular? When the yield on U.S. Treasuries spikes, its makes these bonds more attractive to investors, especially given the macroeconomic uncertainty resulting from the ongoing bear market. The flight to safety accelerated as interest-sensitive investors pulled money out of stocks to take advantage of the higher bond yields, further spooking some equity investors.

The global financial system is hopelessly intertwined, so developments on faraway shores can have a major impact on things much closer to home -- even when it wouldn't seem likely.

That said, even after today's rally, the recent plunge is creating a rare opportunity to get these best-in-breed growth stocks at a discount. That's not to say that they won't fall lower -- they certainly could. However, each of these stocks is currently at or near multi-year lows, and as cheap as they've been in years, so investors have likely been taking advantage of the bargains, thus pushing prices higher.

Shopify, PayPal, and MercadoLibre stocks are currently selling five times, three times, and three times next year's sales, when a reasonable price-to-sales ratio is between one and two. For investors looking three to five years into the future, buying shares of these world-class companies while their valuations are near historic lows will seem like a prescient move indeed.