SPY (SPDR ETF) down more than index?

Question

I'm confused why the SPY was down 1.03% on Tuesday June 26th but the S&P 500 Index was only down .32%.

The SPY (ETF) is supposed to mirror the S&P 500 index. I know it won't be completely the same but I can't figure out why the ETF was down 3 times the amount of the index it is supposed to mimic. What causes this big discrepancy?

Answer 1

It's the greater fool theory at work: If you're in the markets and you don't know WHO the greater fool is, it's YOU.

Not sure and not following it hard but it could have something to do with option expirations (triple witching day). Was that date an option expiration day?

Addendum June 28: If you want to read it as such, you can follow Adam J's excellent logic a step further: assume that smaller investors (socalled "dumb money") were bailing at a higher rate (using the retail-friendly SPY contracts) than the institutional money which moves the actual index ("smart" money). This would be a contrarian "bullish" indicator. (i.e. the assumption that the "dumb money" typically does the wrong thing).

Answer 2

That is strange...

And it isn't options, those have already expired this month.

ETF prices are determined by supply and demand, and they don't necessarily move in perfect lockstep with the index they follow. This is a big gap, but if someone wanted to get out badly (or a lot of people did) that could cause a significant dispairity.

Answer 3

SPY doesn't mimic the day to day of the SP 500. I would say it was how dividends and options are formulated between SPY and the SP 500.