What is the implication of the recent stock market fall?

 On Monday, the US stock experienced the largest fall as the market was afraid the new Fed chairman would increase the rates. It implies that the US Fed definitely does not provide guidance for the market, as often before the Fed meetings, the market often volatiles more than average. In addition, from what we saw on Monday, the change in the US Fed's leadership shifts the market expectation about the future Fed's policy. However, such volatility that responds to the US Fed's possible policy is often a short term reaction that does not affect the market mean. Often the market is relatively more optimistic when the economic environment is good as when negative news hit the market, the market may fall and but bounce back, and when there is positive news, the market may rise and not fall afterwards. In addition, when the Fed officially announces its monetary policy, the market will definitely respond to the news. This gives even more solid evidence that the current monetary policy does not follow the guidance rule that the market does not know the monetary policy in the future.

When central banks do not follow the guidance rule, markets will be very sensitive to central banks' actions (but not behaviors), this adds more volatility to financial markets. Guidance allows the market to know what central banks will respond to markets, since central banks keep their promises and all actions are expected by the markets. Under such circumstance, the volatility in the market comes from people's expectations about central banks will be minimized. In the future, if central banks try to be more active, they will add more volatility to financial markets.