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Jeremy Siegel lays out his bull case for stocks

The market has plenty of reasons to keep on rallying, according to closely followed Wharton finance professor Jeremy Siegel.

In an interview Wednesday on CNBC's "Trading Nation," the perennial bull acknowledged that optimism following the election of President Donald Trump "drove this stock rally last November, December, January."

Yet he's not as worried as some others about the market's potential reliance on Trump's tax- and regulation-cutting agenda, given the many and varied potential bullish drivers that have come to the fore.

"What has driven the market further up has been the great earning season that we had in the first quarter. It was the best guidance, forward guidance, that I had heard in many, many years," he said. "And, as the Trump agenda has gotten into more trouble and has stalled, what has taken over is basically been good earnings, global growth, both in Europe emerging markets, China stabilizing, a lower dollar, great for multinationals and low inflation, and a dovish Fed."

"So, we've shifted from, 'Hey, Trump tax cut, no regulation' to 'Hey, the world economy's doing pretty well,'" Siegel added.

But that doesn't mean that the professor has abandoned those earlier bullish hopes about what Trump's election could mean for corporate America.

"I am very, very confident that we're going to get corporate tax cuts and reform, and also changes in the personal tax," Siegel said. "I think the Republicans are very cognizant they've got a two-year window where they control all three branches of Congress and the Senate and executive" branches, so they "are going to get something done, whether it's going to be this year or next year."

Still, U.S. economic growth could show that "we might be slightly ratcheting up from a 2 percent [annual growth] economy, maybe to a 2.5 percent economy, even without any Trump stimulus," he said. "If that goes into the fourth quarter, I think that'll keep stocks on a roll going forward."

Despite the potential for accelerating growth, he doesn't see the Federal Reserve's monetary policy tightening plans as an existential threat to the rally.

Fed Chair Janet Yellen's testimony on the House on Wednesday "put, I think, to rest any fears that the Fed will be overaggressive over the next six months," Siegel said.

Looking forward, an important catalyst could be second-quarter earnings, as well as the guidance that companies provide.

"We should all be listening very carefully to this second quarter earnings that are just beginning to roll and hope that you know, the guidance is as strong as we got in that first quarter," Siegel said.

"Corporate guidance for the year depends on very longer range issues that I don't see have changed fundamentally," he added. "I want to hear from the executives themselves on what they see in the second half of this year."

The S&P 500 has risen 9.1 percent this year.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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