The surprise selloff in U.S. stocks a day after the Federal Reserve last week decided to hold off on a rate increase probably shook investor confidence more than the Fed’s action or inaction itself.

This probably isn’t how the Fed wanted it to play out. The promise of an extension of ultraloose-monetary policy would normally be expected to deliver a positive jolt to stocks.

So, why all the glum faces on Wall Street?

“The market was prepared for a dovish hike, otherwise the S&P 500 would not have rallied to 2,000 going into the meeting,” said Michael Antonelli, equity sales trader at R.W Baird & Co.

“But instead, investors were treated to a gloomy outlook about China,” Antonelli said.

Stocks ended lower after choppy trading in the wake of the Fed decision on Thursday, then tanked on Friday, with the S&P 500 SPX, +1.05% dropping 1.6% and the main indexes turning negative for the week. On Monday, stocks were higher, but struggled to maintain gains as biotech shares sold off.

Meanwhile, gold scored sizable gains last week as investors turned to a yellow metal for safety.

Read: Gold marks second-best settlement of the month

Some analysts think the market wanted the Fed to hold off on the rate increase, but it also wanted to know exactly when the central bank would start normalizing rates.

In either case, what the market didn't expect was an expansion of the menu of indicators the Fed would consider before raising rates.

For example, the Fed statement citing concerns in China irked a lot of investors, who thought the central bank should be more focused on a domestic economy and not global economy.

“The Fed appears to be taking a cautious stance in this unsteady environment. It doesn’t want to make the same mistake as Europe in 2008: an ill-timed rate increase that backfired and set back its recovery,” wrote Matt Freund, chief investment officer of USAA Mutual Funds in a note on Friday.

Chairwoman Janet Yellen suggested the Fed would telegraph its moves to markets so as to avoid roiling the market. But telegraphing something they are not so sure about proved tough.

Instead, the exact timing of the Fed’s first rate increase in nearly a decade and what might compel it to ultimately lift rates is as unclear as it was before the meeting on Thursday.

Critics argue that the Fed’s decision to keep key borrowing rates unchanged at or near zero, and more precisely Yellen’s message, has fanned more confusion.

“I think the Fed set the stage for a more negative reaction in the markets which is exactly what they didn’t want to have happen,” said Kate Warne strategist at Edward Jones.

“If the Fed wanted to reduce uncertainty and market risk with this decision, it failed,” wrote Brad McMillan, chief investment officer at Commonwealth Financial Network.

“While markets were not expecting a rate hike, they were expecting some more clarity. By not providing that clarity here in the U.S., and provoking worry about international markets, the Fed has actually gotten the worst of both worlds,” he said.

The Fed also stepped back from ‘data dependent’ language. During the news conference, Janet Yellen stressed that the committee’s “decision will not hinge on any particular data release or on day-to-day movements in financial markets”.

“Instead, the decision will depend on a wide range of economic and financial indicators. And our assessment of their cumulative implications for actual and expected progress towards our objectives,” Yellen said.

Meanwhile, traders have shifted their expectations for a Fed rate increase to expecting the Fed to hold rates at near zero until 2016.

“This has been a classic “buy the rumor, sell the news” action in the market, said Lance Roberts, chief editor of StreetTalkLive.com financial blog.

What is not clear is whether markets would have rallied had the Fed raised interest rates at this meeting. The challenges the global economy faces won’t disappear simply because the Fed ignores them. Indeed, some analysts think a rate increase would have a negative impact as well as a delay if not more.

Also read:For investors, U.S. data still key gauge for when Fed will hike.

“The notion that markets would rally had the Fed raised the rates is wrong. Markets would have tanked, because raising rates would mean tightening monetary policy while the economy is still not doing well,” Roberts said.