War-fueled inflation means stocks could struggle for the next 3 months, Wharton professor Jeremy Siegel says

• Wharton's Jeremy Siegel says the stock market might struggle for at least the next few months.
• Siegel said he believes higher oil prices are already raising inflation across the economy.
• The Fed could eventually hike rates to get price growth under control, he said.

Investors might be better off staying away from the stock market until the summer, according to Wall Street's "professor of stocks."

Jeremy Siegel, the famed economist and Wharton finance professor, said he thinks the US market will likely struggle to move higher for the next few months. That's because, while a resolution seems near, the Iran war has already put upward pressure on inflation, he said, referring to the knock-on effects from higher oil prices.

"I don't think the short-term looks all that favorable, very honestly," Siegel told CNBC on Thursday, adding that he believed investors should hold equities rather than buy at this point.

"I don't see a lot of upside until we get a resolution, and that is not looking as good as I hoped. Which means what? A sideways market for two, three months," he later added.

Markets have been worried about the ripple effects of the recent spike in oil prices, which could raise prices for other goods and hurt consumer demand.

That chain reaction may already be taking place, Siegel suggested. He pointed in particular to Delta Air Lines, which told investors this week that it expects to spend $2 billion more on fuel costs through June.

"Well, how is he going to cover that to keep earnings up?" he said of Delta's CEO. "The only way to cover that to keep earnings up is to raise fares."

Airline demand has been strong in recent months, but that was when oil prices were trading around $60 a barrel, Siegel said, suggesting the economy would also start to see demand destruction, something other economists have warned could hurt growth.

Stocks rallied sharply on news that the US, Israel, and Iran reached a ceasefire agreement, but oil prices remain elevated. Brent crude, the international benchmark, was around $95 a barrel on Wednesday, still up 34% since the start of the war.

Siegel also said the outlook for Fed rate cuts has dimmed. The central bank is facing "much more inflationary pressures" than it did prior to the start of the war, he said, pointing to growth in borrowing and the US money supply, two factors that could also stoke inflation.

Total consumer credit rose to a record $5.1 trillion in February, according to Fed data. M2, one measure of the supply of money in the economy, also rose to a record $22.6 trillion that month.

Siegel said he thinks the Fed is likely to hold off on adjusting interest rates through the end of Chairman Jerome Powell's term this May, but that the central bank's "most likely direction" would be to hike rates later this year. Rate cuts are likely off the table for the near-future, he added.

"The Siegel family would hold the extra cash," he said of how investors should be positioned, though he noted he remained bullish on US stocks for the long-term.