Wall Street's newest sell signal is a single word: accounting.

Shares of conglomerate Tyco International Ltd , insurer American International Group Inc., media giant AOL Time Warner Inc., and Cendant Corp. , a travel and real estate firm, initially tumbled Wednesday as investors dumped companies they believed -- rightly or wrongly -- may have a tough time explaining their balance sheets to investors.

The stocks erased most of their losses after the Federal Reserve pointed to signs of economic strength and stood pat on interest rates, inspiring a late-day rally, but Wall Street pros say fears of accounting irregularities are still widespread.

"It's a witch hunt right now," said Richard Cripps, chief market strategist at Legg Mason Wood Walker.

The collapse of energy trader Enron Corp. and subsequent jitters about Tyco's accounting for its myriad acquisitions have made investors leery. Wall Street in the 1990s bull market often was willing to overlook obtuse financial statements, but these days it is unforgiving.

"Companies like AOL, where it's difficult to understand how they make money, they're going to get hit," said Crit Thomas, head of growth equities for the Armada Funds in Cleveland. Thomas said his funds hold Tyco shares, but he is considering selling them.

Tyco dropped as much as 18 percent to a two-year low of $27.50 in the morning as investors struggled to understand its complicated accounting. Shares recovered to trade up 4.5 percent, at $35.15, after two top executives said they will buy one million shares to stop the stock's downward spiral.

The Fed's upbeat comments, which signaled the economy is on the road to recovery, also helped boosted battered stocks.

Money managers said companies that restate earnings will also be punished as jittery investors dump the stocks and ask questions later.

Shares of Anadarko Petroleum Corp., for one, fell as much as 7.4 percentWednesday after the largest U.S. independent oil and gas producer said it restated third-quarter earnings to include an additional $1.7 billion in charges to reflect lower values for its U.S. oil and gas assets.

Still, shares made up ground, to end down 1 percent, at $46.89, as some investors praised company executives for clearly explaining the mistake and placing personal calls to analysts.

"Write-offs from now on are going to kill the stock," said William Muggia, chief investment officer at Westfield Capital Management.

Investors are also taking a closer look at companies with high debt levels, such as automobile, airline, conglomerates, telecommunications and energy companies, saying they rely inordinately on borrowed funds to support growth.

Thomas pointed to power producer Calpine Corp. as an example. The power producer's shares dropped as much as 7.5 percent Wednesday, before clambering up 15 cents to $11.15.

"All highly leveraged companies need to be carefully looked at," said Winslow Management Co. portfolio manager Jack Robinson, who has pared his holdings of Calpine.

Among other stocks hit by worries over accounting, AIG fell 2.1 percent, to $71.29 after regulators told PNC Financial Services Group Inc. to consolidate some deals with AIG-run special vehicles into its balance sheet, forcing it to restate its 2001 earnings $155 million lower.

Cendant, which owns Avis rental car, has seven off-balance-sheet entities and has been subject to an investigation of its accounting practices in the past. The company's stock fell 2.9 percent, to $16.05, Wednesday.

"I think in some cases full disclosure will reveal reasons that the stock should be lower ...," Legg Mason's Cripps said, "but what you're dealing with now is the emotional impact of it more so than the reality of it."