The US death toll climbed to 39, many of the victims killed by falling trees, and rescue work continued.
The storm that made landfall in New Jersey on Monday evening with hurricane force cut power to more than 8.2 million across the East and put the presidential campaign on hold just one week before Election Day.
New York was among the hardest hit, with its financial heart closed for a second day.
The storm caused the worst damage in the 108-year history of the city's subway system, and there was no indication of when the largest US transit system would be rolling again.
"This was a devastating storm, maybe the worst that we have ever experienced," New York City Mayor Michael Bloomberg said.
But the full extent of the damage in New Jersey was being revealed as morning arrived. Emergency crews fanned out to rescue hundreds.
A hoarse-voiced New Jersey Gov Chris Christie gave bleak news at a morning news conference: Seaside rail lines washed away. No safe place on the state's barrier islands for him to land. Parts of the coast still under water.
"It is beyond anything I thought I'd ever see," he said.
"It is a devastating sight right now."
The skyline of lower Manhattan in darkness after a preventive power outage caused by giant storm Sandy in New York. Reuters Photo
The death toll from Sandy in the US included several killed by falling trees. Sandy also killed 69 people in the Caribbean before making its way up the Eastern Seaboard.
Airlines canceled more than 12,000 flights. New York City's three major airports remained closed.
Most major tunnels and bridges in New York were closed, as were schools and Broadway theaters.
Around midday, Sandy was about 120 miles (190 kilometers) east of Pittsburgh in Pennsylvania, pushing westward with winds of 45 mph (72 kph), and was expected to make a turn into New York State on Tuesday night.
Although weakening as it goes, the storm will continue to bring heavy rain and flooding, said Daniel Brown of the National Hurricane Center in Miami.
Sandy also brought blizzard conditions to West Virginia and neighboring Appalachian states, with more than 2 feet (0.61 meters) of snow expected in some places.
Sandy will end up causing about $20 billion in property damage and $10 billion to $30 billion more in lost business, making it one of the costliest natural disasters on record in the US, according to IHS Global Insight, a forecasting firm.
President Barack Obama declared a major disaster in New York and Long Island, making federal funding available to residents of the area. He suspended campaigning for a third day Wednesday.
Obama, speaking during a stop Tuesday at Red Cross headquarters, warned the public that the massive storm that struck the East Coast "is not yet over."
He said there were still risks of flooding and downed power lines. He called the storm "heartbreaking for the nation."
The President offered his thoughts and prayers to those affected and told them "America is with you."
He said he also told government officials coordinating the response that there was "no excuse for inaction."
And he said he told governors in affected areas that if they get no for an answer, "they can call me personally at the White House."
Republican challenger Mitt Romney resumed his campaign, but with plans to turn a political rally in Ohio into a "storm relief event."
Trading at the New York Stock Exchange was canceled again on Tuesday after the storm sent a nearly 14-foot (4.27-meter) surge of seawater, a record, coursing over its seawalls and highways and into low-lying streets.
The water inundated tunnels, subway stations and the electrical system that powers Wall Street and sent hospital patients and tourists scrambling for safety.
Skyscrapers swayed and creaked in winds that partially toppled a crane 74 stories above Midtown. A large tanker ship ran aground on the city's Staten Island.
A fire raged in a neighborhood Tuesday morning in the borough of Queens, near the Atlantic Ocean, with 80 to 100 homes destroyed but no deaths reported.
"This will be one for the record books," said John Miksad, senior vice president for electric operations at Consolidated Edison, which had more than 670,000 customers without power in and around New York City.
In New Jersey, where the superstorm came ashore, Sandy cut off barrier islands, swept houses from their foundations and washed amusement pier rides into the ocean.
A 168-foot water tanker, the John B Caddell, sits on the shore where it ran aground on Front Street in the Stapleton neighborhood of New York's Staten Island. AP Photo
It also wrecked several boardwalks up and down the coast, tearing away a section of Atlantic City's world-famous promenade. Atlantic City's 12 waterfront casinos came through largely unscathed.
A huge swell of water swept over the small town of Moonachie, and authorities struggled to rescue about 800 people, some of them living in a trailer park. Police and fire officials used boats to try to reach the stranded.
The massive storm reached well into the Midwest with heavy rain and snow. Chicago officials warned residents to stay away from the Lake Michigan shore as the city prepared for winds of up to 60 mph (96 kph) and waves exceeding 24 feet (7.2 meters) well into Wednesday.
Curiosity turned to concern overnight as New York City residents watched whole neighborhoods disappear into darkness as power was cut.
The World Trade Center site was a glowing ghost near the tip of Lower Manhattan.
Residents reported seeing no lights but the strobes of emergency vehicles and the glimpses of flashlights in nearby apartments. Lobbies were flooded, cars floated and people started to worry about food.
As Hurricane Sandy closed in on the Northeast, it converged with a cold-weather system that turned it into a monstrous hybrid of rain and high winds — even bringing snow in West Virginia and other mountainous areas inland.
Just before it made landfall, forecasters stripped Sandy of hurricane status, but the distinction was purely technical, based on its shape and internal temperature. It still packed hurricane-force winds.
While the hurricane's 90 mph (144 kph) winds registered as only a Category 1 on a scale of five, it packed "astoundingly low" barometric pressure, giving it terrific energy to push water inland, said Kerry Emanuel, a professor of meteorology at MIT.
New York University's Tisch Hospital was forced to evacuate 200 patients after its backup generator failed.
Waves pound a lighthouse on the shores of Lake Erie near Cleveland. AP Photo
NYU Medical Dean Robert Grossman said patients — among them 20 babies from the neonatal intensive care unit who were on battery-powered respirators — had to be carried down staircases and to dozens of ambulances waiting to take them to other hospitals.
A construction crane atop a $1.5 billion luxury high-rise overlooking Central Park collapsed in high winds and dangled precariously. Thousands of people were ordered to leave several nearby buildings as a precaution.
Obama issued federal emergency decrees for New York and New Jersey, declaring that "major disasters" existed in both states. One disaster forecasting company predicted economic losses could ultimately reach $20 billion, only half insured.
"It's total devastation down there, there are boats in the street five blocks from the ocean," said evacuee Peter Sandomeno, one of the owners of the Broadway Court Motel in Point Pleasant Beach, New Jersey.
"That's the worst storm I've ever seen, and I've been there for 11 years."
Obama will stay in Washington on Wednesday to oversee the response to Hurricane Sandy, canceling another day of campaigning roughly a week before Election Day, the White House said on Tuesday.
"The President will remain in Washington, DC on Wednesday to monitor the response to Hurricane Sandy and ensure that all available federal resources continue to be provided to support ongoing state and local recovery efforts," White House spokesman Jay Carney said in a statement.
"As a result, the President will not participate in the campaign events that had been scheduled in Ohio tomorrow."
Rescue workers use a hovercraft to rescue a wheelchair-bound resident from flood waters brought on by Hurricane Sandy in Little Ferry, New Jersey. Reuters Photo
The President had already skipped political events on Monday and Tuesday to be in Washington for the storm and its aftermath.
Sandy, which was especially imposing because of its wide-ranging winds, brought a record storm surge of almost 14 feet to downtown Manhattan, well above the previous record of 10 feet during Hurricane Donna in 1960, the National Weather Service said.
Water poured into the subway system and tunnels that course under the city, raising concerns that the world's financial capital could be hobbled for days.
"Hitting at high tide, the strongest surge and the strongest winds all hit at the worst possible time," said Jeffrey Tongue, a meteorologist for the weather service in Brookhaven, New York.
Hurricane-force winds as high as 90 miles per hour (145 km per hour) were recorded, he said.
"Hopefully it's a once-in-a-lifetime storm," Tongue said.
The aftermath of flooding following Hurricaine Sandy in the Financial District of New York. AFP Photo
Large sections of New York City were without power, and transportation in the metropolitan area was at a standstill.
"In 108 years our employees have never faced a challenge like the one that confronts us now," Metropolitan Transportation Authority chairman Joseph Lhota said in a statement.
It could take anywhere from 14 hours to four days to get the water out of the flooded subway tunnels, the MTA said.
"The damage has been geographically very widespread" throughout the subway, bus and commuter train system, MTA spokesman Aaron Donovan said.
Post-Tropical Cyclone Sandy is seen as it makes landfall about five miles (8km) southwest of Atlantic City, New Jersey in this National Oceanic and Atmospheric Administration (NOAA) Global Online Enrollment System (GOES)-13 satellite colorized infrared handout image taken at 8pm EST (0000 GMT). Reuters
More than 50 homes burn
The unprecedented flooding hampered efforts to fight a massive fire that destroyed more than 50 homes in Breezy Point, a private beach community on the Rockaway barrier island in the New York City borough of Queens, the Fire Department of New York said.
Two people in New York City reportedly died in the storm - a man in a house hit by a tree and a woman who stepped into an electrified puddle of water. Two other people were killed in suburban Westchester County, north of New York City, and two others were reported killed on suburban Long Island.
A motor vehicle death in Massachusetts was blamed in part on the bad weather. Two other people were killed in Maryland in storm-related incidents, state authorities said, and deaths also were reported in Connecticut, New Jersey, Pennsylvania and West Virginia, CNN said.
Toronto police also recorded one death - a woman hit by flying debris.
Cars floating in a flooded subterranian basement following Hurricaine Sandy in the Financial District of New York. AFP Photo
More than 7 million people in several US states were without electricity due to the storm, which crashed ashore late on Monday near the gambling resort of Atlantic City, New Jersey.
With Obama and Republican presidential rival Mitt Romney keeping campaigning on hold for a second day instead of launching their final push for votes ahead of the November 6 election, the storm's onslaught added a new level of uncertainty to an already tense, tight race for the White House.
Obama, who has made every effort to show himself staying on top of the storm situation, faces political danger if the federal government fails to respond well in the storm's aftermath, as was the case with predecessor George W Bush's botched handling of Hurricane Katrina in 2005.
But Obama also has a chance to look presidential in a national crisis.
Workers clear a downed tree blocking East 96th street in Central Park the morning after Hurricane Sandy in New York City. AFP Photo
The federal government in Washington was closed for a second day on Tuesday, and schools were shut up and down the East Coast.
The storm was plowing westward over south-central Pennsylvania, still packing near hurricane-force winds as strong as 65 miles per hour (105 km per hour), the National Weather Service said.
Wind gusts, rain and flooding were likely to extend well into Tuesday, but without the storm's earlier devastating power, said AccuWeather meteorologist Jim Dickey.
"Overall, the worst has past," Dickey said.
The storm's wind field stretched from North Carolina north to the Canadian border and from West Virginia to a point in the Atlantic Ocean halfway to Bermuda, easily one of the largest ever seen, the National Hurricane Center said.
Heavy snow fell in higher elevations of the Appalachian Mountains inland.
A public worksman shovels debris from the streets in Ocean City, Maryland hours after Hurricane Sandy made landfall. AFP Photo
New Jersey towns flooded
Three towns in New Jersey, just west of New York City, were inundated with up to 5 feet of water after a levee on the nearby Hackensack River was overtopped or breached, officials said. Rescuers were using boats to aid the marooned residents of Moonachie, Little Ferry and Carlstadt.
In New York, a crane partially collapsed and dangled precariously from a 90-story luxury apartment building under construction in Midtown Manhattan.
Much of the city was deserted, as its subways, buses, commuter trains, bridges and airports were closed. Power outages darkened most of downtown Manhattan as well as Westchester County, affecting more than 650,000 customers, power company Consolidated Edison said.
"This is the largest storm-related outage in our history," said John Miksad, Con Ed's senior vice president for electric operations.
The previous record was the more than 200,000 customers hit with outages last year during Hurricane Irene, the utility said.
Neighborhoods along the East and Hudson rivers in Manhattan were underwater, as were low-lying streets in Battery Park near Ground Zero, where the World Trade Center once stood.
US stock markets closed on Monday for the first time since the attacks of September 11, 2001.
Most areas in downtown Manhattan were without power on Monday morning. As the sun rose, most of the water in Manhattan's low-lying Battery Park City appeared to have receded.
A security guard at 7 World Trade Center, Gregory Baldwin, was catching some rest in his car after laboring overnight against floodwaters that engulfed a nearby office building.
Residents are rescued by emergency personnel from flood waters brought on by Hurricane Sandy in Little Ferry, New Jersey. Reuters Photo
"The water went inside up to here," he said, pointing to his chest.
"The water came shooting down from Battery Park with the gusting wind."
Power and back-up generators failed at New York University Hospital, forcing patients to be moved elsewhere for care.
In Lower Manhattan, firefighters used inflatable orange boats to rescue utility workers stranded for three hours by rising floodwaters inside a power substation.
One of the Con Ed workers pulled from the floodwater, Angelo Amato, said he was part of a crew who had offered to work through the storm.
"This is what happens when you volunteer," he said.
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