Longtime market bull Jeremy Siegel says this week's stock sell-off could evolve into a 10 percent correction.
The Wharton Business School professor cited the Labor Department's jobs report as the main culprit in the Dow Jones industrial average's nearly 666-point drop on Friday. The S&P 500 also fell more than 2 percent.
"I think what happened today was an interest rate effect. When I saw at 8:30 that wage [increase] year over year hitting a nine-year high, I said, 'Wow, we're probably going to get four interest rate hikes, we're going to see the 10-year probably go to 3 [percent],'" Siegel said on CNBC's "Closing Bell."
Interest rates jumped higher following the Labor Department's strong jobs data, likely to be seen by the Federal Reserve as support for up to four rate hikes in 2018. Stocks immediately tumbled as a result, with investors growing increasingly anxious about the cost of borrowing.
Siegel also said traders were overplaying the impact of the recent Republican tax cuts.
"We overdid it at the end of last year and the beginning of this year. I mean, I think we almost double-counted the effect of the corporate tax cut, which is very, very positive," the economist added. "But you were going up far more than what actually earnings were going to rise as a result of the tax cut."
"Will this turn into a correction, 10 percent? It could."