The S&P 500 could hit record highs soon if no major retaliation from Iran, Wharton professor Jeremy Siegel says

• America's entry into the Israel-Iran conflict has markets on edge.
• But Jeremy Siegel predicts that stocks can still soar to fresh records.
• The Wharton professor views the market's muted reaction as a positive indicator.

The US attacks on Iranian nuclear facilities over the weekend have sparked fresh anxiety in markets, but there's a scenario in which stocks can soar to new records amid the conflict.

That's according to Jeremy Siegel, the chief economist of Wisdom Tree and a professor of Finance at The Wharton School at the University of Pennsylvania, who said that the development could ultimately be a positive for stocks.

Siegel told CNBC on Monday that, as he sees it, the market is likely to continue edging higher in the short term. The economist predicts that "new all-time highs in the S&P 500 are certainly attainable over the next several weeks."

He added that his thesis is contingent on Iran taking no retaliatory action towards the US. Leaders in Iran have "vowed to respond," stating that it "reserves all options."

Trump has made it clear that he is not opposed to using further military force if Iran chooses to escalate the conflict further.

The market's reaction has been muted so far, with minimal price action among major indexes on Monday and oil slipping back down after initially spiking after the US attacks.

Siegel described the attack as "a success to neutralize Iran," noting that he saw this as ultimately being positive for stocks, as it would likely lead to a faster resolution being reached for the countries involved.

He said he believes major US stock indexes can reach new highs if the conflict does not persist and Iran does not escalate further, which he seems to see as the most likely scenario.

"I think most people agree they are farther away from producing a bomb than they were on Friday, and that's positive for the markets," he said.