What happened

A broad cross-section of stocks charged sharply higher on Monday, as Wall Street focused on the actions taken by a foreign government to settle jittery financial markets.

With that as a backdrop, a number of stocks engrained in the digital economy outperformed the broader markets. Shares of cybersecurity powerhouse CrowdStrike Holdings (CRWD 2.66%) rose as much as 5.5%, artificial intelligence and business analytics specialist Palantir Technologies (PLTR 1.40%) jumped as much as 6.9%, and streaming pioneer Roku (ROKU 1.00%) surged as much as 8.6%. As of 2:11 p.m. ET, the trio was still trading higher, gaining 4.5%, 5.7%, and 8.4%, respectively.

There no company-specific news fueling the increase, but shares of these tech-centric stocks have been pummeled over the past year, so any good news is an excuse for investors to buy shares at a discount. Positive developments in the ongoing saga involving British efforts to settle market unrest provided the necessary catalyst.

A person clenching their fist in victory while looking at graphs on a computer.

Image source: Getty Images.

So what

There have been a number of dramatic developments in the U.K. over the past several days, which have had a ripple effect, buoying U.S. stocks in the process when the markets opened on Monday morning. The S&P 500 and the Nasdaq Composite gained 2.6% and 3.3%, respectively, on the news.

The U.K.'s incoming Chancellor of the Exchequer, Jeremy Hunt, said Monday the government was scrapping "almost all" of a sweeping tax cut plan that was introduced just three weeks ago. The plan, which would have marked the country's largest tax cuts in more than 50 years, caused panic in Britain's financial markets, sending the British pound to a record low against the U.S. dollar, sparking fears regarding the stability of the country's financial situation. 

This came on the heels of an announcement this weekend that Britain would end its massive bond-buying campaign, after spending two weeks and billions of pounds to stabilize the country's floundering bond market. Since the global bond markets are so hopelessly intertwined, this helped boost the bond market in the U.S. as well.

These developments helped push U.S. Treasury yields lower, with the benchmark 10-year yield falling below 4%, a critical psychological level it had surpassed several times over the past week, notching its highest rate since 2008. This impacts numerous interest rates, the most significant being mortgages, as the 30-year fixed mortgage rate spiked above 7% for the first time since April 2002. Following the announcement early Monday, yields retreated some from their historic highs, though mortgage rates continue to remain stubbornly high. 

Now what

So what does all this drama in the U.K. have to do with the U.S. stock market in general and our trio of technology stocks in particular? When the yield on U.S. Treasuries spikes, its makes these bonds more attractive to investors, particularly in light of the macroeconomic uncertainty resulting from the ongoing bear market and the "is-it-or-isn't-it" recession. Generally speaking, many interest-sensitive investors pull money out of the stock market in times of uncertainty, opting for the safety of higher bond yields, which tends to send financial markets tumbling. The reverse is also true. When rates begin to fall, investors tend to seek the potential for higher overall returns in the stock market, fueling returns on Wall Street -- at least over the short term.

There's an upside to all this volatility, particularly for long-term investors. When Wall Street is selling off both good stocks and bad, investors are given the rare opportunity to get these top-notch growth stocks at discounted prices. That's not to say that they won't fall lower -- they likely will. However, each of these stocks is currently at or near multi-year low valuations and as cheap as it's been in years.

CrowdStrike and Palantir stocks are still somewhat pricey, currently selling 12 times and seven times next year's sales, while Roku's price-to-sales ratio is currently about two, recently slipping into bargain basement territory.

I like all three stocks, but for my money, CrowdStrike is the surest bet of the three at this point. Even with its higher valuation, it has increased its revenue by 60% so far this year, even as other companies have struggled.