Yes, rebalancing days involve some volatility. The way these index ETFs work though is that broker dealers can trade a basket of securities matching the index

Yes, rebalancing days involve some volatility. The way these index ETFs work though is that broker dealers can trade a basket of securities matching the index for a share of the ETF (and vice versa). Because of this price mismatches get fixed very quickly. S&P announces also changes ahead of time so while there is initial price movement it's not all instantaneous.