Senate's Deal Signals Potential End to US Govt. Shutdown: Top ETFs to Buy

In a significant move to end the ongoing government shutdown in the United States, the Senate passed the first major stage of a bipartisan agreement yesterday (as cited in a CNBC press release). This legislative action, which overcomes a key procedural hurdle, signals that a final resolution to the political impasse in Washington may be within reach, potentially leading to an imminent government reopening.

For investors, the final days of a government shutdown often present a unique opportunity. Markets historically anticipate resolutions and begin pricing in a return to normalcy.

As the uncertainty gradually dissipates, this period of transition might offer an ideal time for investors to invest in top-tier exchange-traded funds (ETFs) that are well-placed to benefit from the post-shutdown recovery and broader market stability.

Factors Suggesting the Shutdown Could Wrap Up Soon

The anticipated end to the U.S. government shutdown this month is being driven by a convergence of political, macroeconomic and geopolitical pressures.

From a macroeconomic standpoint, the shutdown has resulted in significant and rising costs, estimated at billions of dollars each week. The travel sector, for instance, has been losing an estimated $1 billion per week in lost spending (as per a report published by the U.S. Travel Association in October 2025). Such mounting economic costs increase the pressure on all parties to reach a compromise.

Furthermore, the shutdown has caused a "data blackout," with key federal economic statistics like the non-farm payrolls report delayed. This lack of critical data creates uncertainty for the Federal Reserve regarding monetary policy and for businesses trying to gauge the economic landscape, adding urgency to the situation.

Geopolitically, a protracted shutdown projects an image of instability and impairs the government's ability to respond to global challenges.

Thus, growing pressure from industry groups, coupled with the latest Senate bipartisan deal, underscores the political imperative to restore full government function within this month, before the economic damage becomes irreversible.

Why ETFs Are a Smarter Move Rather Than Individual Stocks?

With high-growth technology and AI stocks driving the bull market, some investors might be attracted to invest in these stocks to gain more on the back of soaring market optimism, which may reach a new peak once the government reports.

However, considering that many experts remain wary of a potential AI bubble and the sustainability of the rally, investing in individual growth-oriented tech and AI stocks carries significant company-specific risks, particularly if a single company underperforms due to execution missteps or increased competition.

In contrast, investing in top ETFs offers a smarter, more strategic approach, especially during periods of market transition. ETFs provide instant diversification, spreading your investment across dozens or hundreds of companies. This structure mitigates the risk of a single stock's poor performance severely affecting your portfolio. It enables investors to gain exposure to major growth trends, such as AI, without the need to identify which individual company will ultimately lead the market.

Thus, with the market poised for a rebound, the following ETFs offer a balanced way to re-engage with equities.

Health Care Select Sector SPDR ETF (XLV)

This fund, with assets under management (AUM) worth $36.86 billion, provides exposure to 60 companies in the pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. Its top three holding companies are pharma giants — Eli Lilly (14.06%), Johnson & Johnson (8.50%) and Abbvie (7.30%).

XLV has gained 7.7% year to date and charges 8 basis points (bps) as fees. It holds a Zacks ETF Rank #1 (Strong Buy).

Technology Select Sector SPDR ETF (XLK)

This fund, with AUM worth $92.93 billion, offers exposure to 69 companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. Its top three holding companies are tech giants — Nvidia (14.61%), Apple (12.74%) and Microsoft (11.76%).

XLK has surged 24.5% year to date and charges 8 bps as fees. It holds a Zacks ETF Rank #1.

SPDR S&P 500 ETF (SPY)

This fund, with AUM worth $693.69 billion, provides exposure to 503 large-cap U.S. companies. Its top three holding companies are large-cap tech stocks — Nvidia (8.00%), Apple (6.98%) and Microsoft (6.44%).

SPY has soared 15.5% year to date and charges 9 bps as fees. It holds a Zacks ETF Rank #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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