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Cashin: 'Santa Claus' rally will be cut in half

Investors may get coal under their Christmas trees this year after the markets posted surprisingly high gains last month, Art Cashin said Monday.

"When October is up over 7 percent, the result of the next two months — the so-called Santa Claus rally — is cut in half," UBS's director of NYSE floor operations told CNBC's "Squawk on the Street."

"Instead of being up 3 to 3.5 percent, you're going to be up 1.5 percent over those two months," he said.

October has traditionally been a bearish month for U.S. equities, but last month saw the three major indexes post gains of at least 8 percent.

Cashin also said that last month's rally took away from the usual year-end rally.

The markets tried to capitalize on October's gains on Monday, with the Dow Jones industrial average, the S&P 500 and the Nasdaq composite all rising more than 0.5 percent in late-morning trading.

Read MoreWhere are stocks headed post-October rally?

Investors will also be looking for clues regarding the timing of the Federal Reserve's rate increase this week, amid a slew of economic data — including the nonfarm payrolls report due Friday.

"I think the Fed isn't quite sure where the economy is headed here in the fourth quarter, and this is why in the last FOMC statement they said that what they do will be data dependent. I think the data will generally look OK for the months of October and November, and that in those circumstances the Fed does raise rates in December," Maury Harris, UBS's chief U.S. economist, said Monday in another "Squawk on the Street" interview.

Harris added that, if the U.S. economy adds an average of 150,000 jobs in October and November the Fed would probably raise rates.

If the U.S. central bank does raise rates, it would be the first time in nearly a decade it does so. However, Bob Doll of Nuveen Asset Management is not concerned.

"The market's probably going to be OK. We know the history after the early Fed rate increases in the cycle, the market tends to do OK," the firm's chief equity strategist told CNBC on Monday.

Read MoreFed pushes euro to August low against dollar

He also said that rates would still be relatively low since the Fed would be lifting off from near zero.

Cashin, however, said he is not expecting a Fed rates hike.

"If they are at all data dependent, the data does not look like it's moving their way. If anything, it looks as though they are less robust," he said.

Andy Brenner of National Alliance Securities also said Monday he does not expect the Fed to move.

"You've got two central banks that are in easing mode with both the [European Central Bank] ... and the Chinese, and I think the Japanese are going full throttle in November," Brenner told CNBC.

According to the CME Group, the chances of a Fed rate hike in December are 47 percent.