What are the factors affecting Pre-Market/overnight market prices

External question — Personal Finance Stack Exchange Author: user101998 Original post: https://money.stackexchange.com/questions/123959 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. During the past few weeks, it seems to me, that there are different cohorts of people affecting the prices of, say, SPY--the S&P 500 ETF during normal hours and after-hours. This may be a consequence of different groups of people trading in and out, or might be due to the mechanism of the market. For example, SPY went up by 3% during normal hours(9:30 AM - 4 PM), and drops by 1% (4 PM - 6 PM) in after hour of the same day, and the next day pre-market(??? - 9:30 AM), it drops by 5%, and during normal hours, it slowly climbs up to a -2%. I am wondering what is causing this. It seems to me that the normal hour after pre-market has a different view than the pre-market. (It's true that news in the U.S. come out and get into the price more efficiently during normal U.S. hours) I thought the reason for this sharp difference is that the ETF SPY is tied to the futures, and futures are traded on a global basis? Thus if overnight, in the markets for which S&P 500 futures are traded, participants holds a pessimistic view of the S&P 500 futures, then the prices of the S&P 500 futures will decline without anybody buying/selling the ETF itself? The other reason I can come up with is that the market overnight is very illiquid and participants buying/selling can have big impacts on the prices? A related question is what is causing the pre-market prices of individual stocks, if no future market exists? (Would it only be pre-market trading?)

External answer — Personal Finance Stack Exchange Author: Bob Baerker Original post: https://money.stackexchange.com/a/123965 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Yes, the value of SPY is tied to the SPX via fair value arbitrage but that is not causal. That is the linkage between them. There are no different cohorts of people affecting the prices of the SPY during normal hours and after-hours. Nor is there some pattern of X% movement up or Y% movement down during specific time periods of the day. There are simply buyers and sellers motivated by and reacting to the continuous release of news. The market is an auction. When there is net aggregate buying volume taking out the ask prices, prices rises. When there is net aggregate selling volume taking out the bid prices, prices drops. It doesn't matter what time of day it is except that when this occurs during after hours, there are fewer participants and therefore, the lower the liquidity, the more volatile price will be because there are larger price gaps between orders.