The U.S. stock market is going to continue to be tested by rising bond yields the rest of the year, Wharton School finance professor Jeremy Siegel told CNBC on Thursday.

Equities were slammed on Thursday after interest rates hit new multiyear highs.

"Yields are definitely going to be a challenge to the stock market this quarter," Siegel said on "Closing Bell."

"The two most important factors in stock prices are earnings and the interest rates. Now, the earnings this year was fantastic, but you want to know the truth? The good news is out."

The 10-year Treasury yield hit 3.232 percent Thursday morning, its highest level since May 2011. As of the latest reading at 5:05 p.m. ET, the rate was at 3.187 percent. Meanwhile, the yield on the 30-year Treasury, which hit its highest level since October 2014 on Thursday, was up at 3.348 percent.

Siegel, a longtime bull who has since turned cautious, is known for predicting market milestones such as the Dow Jones Industrial Average hitting 25,000.

Late last year, he said he expected market returns of zero to 10 percent in 2018. The was up more than 9 percent for the year before Thursday's pullback. He also anticipated yields would move higher and challenge the market.

Now, Siegel expects stocks to either plateau or slightly pull back. That's because if the 10-year yield moves up along with the anticipated Federal Reserve rate hikes, it will be hard for the equity market to make a lot of progress, he said.

"What is the good news? Maybe if they make a deal on China before year-end. That will give you some pop, but other than that I don't see what could drive stocks markedly higher this quarter," he said.

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