Millions of people awoke on Tuesday to scenes of destruction wrought by monster storm Sandy after it smashed into the eastern US, cutting power swamping New York’s subway system and submerging streets in Manhattan.

At least 15 people were reported killed along the eastern seaboard by Sandy, one of the biggest storms to ever hit the country, which dropped just below hurricane status before making landfall on Monday night in New Jersey.

The storm interrupted the presidential campaign a week before Election Day - posing both risks and opportunities for President Barack Obama as he seeks a second term in a tight race - and closed U.S. financial markets for a second day.

As a weakened but still massive storm system continued its trek inland, more than 1 million people in a dozen states were under orders to evacuate. Sandy left behind a trail of damage - homes underwater, trees toppled and power lines downed - caused by epic flooding and fierce winds all along the Atlantic coast.

In the storm's wake, 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."

Sandy, which was especially imposing because of its wide-ranging winds, brought a record storm surge of almost 14 feet (4.2 meters) to downtown Manhattan, well above the previous record of 10 feet (3 meters) 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.

As residents and business owners began the daunting clean-up effort, large sections of New York City remained without power, and transportation in the metropolitan area was at a standstill.

It was the worst disaster to strike the storied New York subway system in its 108-year history, and the Metropolitan Transportation Authority said it could take up to four days to get the water out of the flooded train tunnels.

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.

New York University hospital was forced to evacuate more than 200 patients, among them babies on respirators in the neonatal intensive care unit, when the backup generator failed. Four of the newborns had to be carried down nine flights of stairs while nurses manually squeezed bags to deliver air to each of the baby's lungs, CNN reported.

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.

Sandy killed 66 people in the Caribbean last week before pounding U.S. coastal areas.

More than 7 million people in several U.S. 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 Nov. 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.

With politics cast aside for the moment, New Jersey Governor Chris Christie, a Republican, heaped praise on the Democratic incumbent for the government's initial storm response.

"The federal government response has been great," Christie, a staunch Romney supporter, told NBC's "Today" show. "I was on the phone at midnight again last night with the president personally ... and the president has been outstanding in this."

Federal government offices in Washington, which was spared the full force of the storm, were 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.

New Jersey towns flooded

Three towns in New Jersey, just west of New York City, were inundated with up to 5 feet (1.5 metres) 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.

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.

U.S. stock markets were set to be closed on Tuesday. They closed on Monday for the first time since the attacks of Sept. 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.

"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."

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. – Reuters