Weather advisories were posted for many Caribbean islands and portions of Florida, and officials were keeping watch along the U.S. East Coast.
Sandy, a Category 2 hurricane with maximum sustained winds of 105 mph, was about 60 miles southeast of Eleuthera and 125 miles east-southeast of Nassau in the Bahamas, moving north at 20 mph, the National Hurricane Center in Miami said in its 5 p.m. EDT advisory.
Sandy is blamed for one death in Jamaica and one death in Haiti, CNN said.
Jamaican broadcaster TV J reported 70 percent of the island's residents were without power and 1,000 people were in shelters.
A hurricane warnings were in effect for the Ragged Islands in the southeastern Bahamas, the central Bahamas and the northwestern Bahamas. The remainder of the southeastern Bahamas was under a tropical storm warning.
Florida's east coast from Ocean Reef to Flagler Beach and Lake Okeechobee were under a tropical storm warning while the area north of Flagler Beach to Fernandina Beach and the Upper Keys from Ocean Reef to Craig Key and Florida Bay were under a tropical storm watch.
Cuba canceled its hurricane warning and a tropical storm warning was canceled for Haiti.
The forecast calls for Sandy to spread across the central and northwestern Bahamas through Friday, with tropical storm conditions expected along the east Florida coast, possibly through Friday night.
Sandy was expected to produce 6-12 inches of rain across Haiti, the Dominican Republic and eastern Cuba. Rainfall totals of 3-6 inches were expected over portions of the Bahamas, and between 1-3 inches of rain were possible across the Florida Keys into southeast, east and central parts of the state. Some areas could see higher isolated rainfall, mudslides and flash flooding.
The National Hurricane Center's five-day forecast indicated Sandy's center will skirt along the U.S. East Coast and could become a powerful nor'easter during the weekend, CNN reported.
CNN said Massachusetts Emergency Management advised that Sandy could make landfall somewhere between Maine and Virginia, bringing heavy rain, flooding, strong winds and power outages.