In "The Great Gatsby", how is Gatsby's death explained by the press and local newspapers?

The text does not provide a detailed account of exactly what the newspapers said. We can, however, gauge from Nick's description how the news was reported. Nick mentions in chapter nine that:

"Someone with a positive manner, perhaps a detective, used the expression “madman” as he bent over Wilson’s body that afternoon, and the adventitious authority of his voice set the key for the newspaper reports next morning."

The word "adventitious" proposes that a detective or some other reliable person (one with a positive manner) had suggested that Gatsby's and Wilson's deaths were the result of an unfortunate mischance. The killings were not premeditated. The inference is that Wilson was crazy and therefore could not have planned the killing. The newspapers obviously adopted this angle and reported it as such.

Nick further mentions that:

"Most of those reports were a nightmare — grotesque, circumstantial, eager, and untrue."

The descriptors Nick uses tell us that the majority of the reports were horrific, terrible pieces of diatribe. The fact that he describes them as "grotesque" implies that the reports probably contained lurid details of the crime scenes, focusing more on the disgusting aspects than on the actual facts, as suggested by the words 'circumstantial'.

"Circumstantial" also insinuates that reporters based their findings on what they saw at the crime scenes and reported on what they therefore thought of the events which preceded the deaths, instead of sticking to reality. They obviously sensationalized all aspects related to the case in their eagerness to print a breaking story and sell newspapers.

The unfortunate deaths of Myrtle, Jay and Mr Wilson became a mere product, a thrill, in order to sell a story. Their deaths, the resultant clamour and unsubstantiated reportage, for monetary gain, once again illustrate the materialism and shallowness of the age.