Sandy also claimed at least 26 lives across the United States, bringing the total number of deaths to at least 94 after the storm wreaked havoc in the Caribbean.
The storm sent trees crashing down and left neighborhood streets looking like rivers. Homes washed off their foundations and onto a New Jersey state highway. Floodwaters rushed into New York's subway tunnels.
Hundreds of people were stranded in one New Jersey town alone Tuesday morning. And Connecticut's governor offered ominous advice in a Twitter post: "If u find urself surrounded by water, call 4 help if u can, then get 2 highest level of home. Hang a white sheet out a street-side window."
Authorities scrambled in boats to rescue trapped residents in several towns after a berm broke in Moonachie, New Jersey.
"Within 30 minutes, those towns were under 4 or 5 feet of water," said Jeanne Baratta, chief of staff for the Bergen County executive.
Hundreds of people had been rescued Tuesday morning, New Jersey Gov. Chris Christie said.
"We'll have to rescue hundreds more," he said.
Meanwhile, the stench of smoke blew across flooded streets as fierce winds and rising waters shorted out power lines and sparked fires in places such as Lindenhurst, New York.
At least 80 homes burned to the ground in the Breezy Point neighborhood of Queens, fire officials said. The cause of the blaze was not immediately released. More than 200 firefighters battled the leaping flames.
Elsewhere in New York City, emergency backup power failed and 10 feet of water flooded the basement of NYU Langone Medical Center, prompting the evacuation of 260 patients. Nurses carried sick newborn babies down nine flights of stairs, manually pumping air into the lungs of those on respirators.
Atlantic City, New Jersey, became an extension of the Atlantic Ocean. Seaweed and ocean debris swirled in the knee-deep water covering downtown streets. Floodwaters ripped up part of the city's fabled boardwalk.
Like many New Jersey residents, Montgomery Dahm stared in awe at the water that deluged Atlantic City.
"I've been down here for about 16 years, and it's shocking what I'm looking at now. It's unbelievable," he said. "I mean, there's cars that are just completely underwater in some of the places I would never believe that there would be water."
The normally loquacious New Jersey governor struggled to find the words Tuesday morning to describe the images of devastation captured by helicopters surveying the damage along the Jersey Shore.
The roller coaster and log plume from a popular amusement park were in the ocean, Christie said, and homes were in the middle of Route 35.
"We're talking months to recover from this," he said.
Along the East Coast, residents reported images they'd never seen before.
"We just looked out the window, and there's this river flowing through the middle of Manhattan," said Earl Bateman, a stockbroker who has lived in New York for 30 years.
More fury to come
But the weather nightmare isn't over yet.
Forecasters said the entire Northeast corridor of the United States will bear the brunt of Sandy, but the storm will affect a much broader area.
Fierce winds will blow from northern Georgia into Canada and as far west as Lake Michigan on Tuesday. Meanwhile, heavy rains will soak New England and parts of the Midwest.
And in West Virginia, a blizzard spawned by Sandy knocked out power, toppled trees and covered streets with masses of wet snow.
"It's 3 feet of heavy snow. It's like concrete," said meteorologist Reed Timmer, who was riding out the storm in Elkins, West Virginia.
Thousands of flights will remain grounded Tuesday. Federal government offices will stay closed. And it will take between 14 hours and four days to get the water out of the subway tunnels in New York.
"The New York City subway system is 108 years old, but it has never faced a disaster as devastating as what we experienced last night," said Joseph Lhota, chairman of New York's Metropolitan Transportation Authority. "Hurricane Sandy wreaked havoc on our entire transportation system, in every borough and county of the region."
The full scale of Sandy's wrath has yet to be determined. But according to a government prediction, the storm's wind damage alone could result in more than $7 billion in economic loss.
Water flooded into the ground zero construction site at a "massive rate," New York Gov. Andrew Cuomo said in a Twitter post. And power outages left the iconic Manhattan skyline eerily dark.
"This will be the largest storm-related outage in our history," said John Miksad, a senior vice president at power company Con Edison, which serves New York City and nearby Westchester County.
It could be days before power is restored for many, New York City Michael Bloomberg said, describing the damage Sandy caused as "enormous."
"The path of destruction that she left in her wake is going to be felt for quite some time," Bloomberg told reporters Tuesday morning.
After killing at least 67 people in the Caribbean, Sandy made landfall Monday night in southern New Jersey, sending waves of water into major cities along the East Coast.
Officials blame Sandy for at least 26 deaths in the United States, including 10 in New York City. Several victims, including an 8-year-old boy in Pennsylvania, died after being hit by a tree or tree limb. Another death was reported in Canada, where flying debris struck a woman.
As the devastation spread, President Barack Obama signed major disaster declarations for New Jersey and New York on Tuesday.
Hardik Rajput of Nassau County, New York, couldn't believe the sight of waves crashing over the height of cars.
"To be honest, I was just stunned," he said. "I've never seen that. Just to see it on the street level was astounding."
In New York, Manhattan's Battery Park recorded a nearly 14-foot tide, smashing a record set by 1960's Hurricane Donna by several feet.
Five hours after making landfall, Sandy still packed hurricane-force winds as it swirled about 10 miles southwest of Philadelphia.
As residents in New York and New Jersey surveyed the flooding left by Sandy, many discovered their high-rise apartment buildings became islands.
"I am looking outside of my sixth-floor apartment, and I see that a new lake has formed in the parking lot adjacent (to) my building," New Yorker William Yaeck said. "I would be concerned, but now my building has a view of the river."
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