The U.S. investment bank cut its year-end price forecast for the S&P by 5 percent to 2,000. It had previously forecast the index to rise to 2,100 by the end of the year.
Goldman also lowered its 2015 earnings-per-share estimate by 4 percent to $109 for the S&P 500, from a previous forecast of $114.
"The impetus for these reductions is that our models now incorporate a slower pace of economic activity in the U.S. and China and a lower oil price than we had been previously assuming," Goldman said in a note on U.S. equity strategy.
The broad measure of U.S. stocks fell to a one-month low on Monday and closed almost 2.6 percent lower at 1,881 points amid worries about the timing of U.S. rate rises and the outlook for China, the world's number two economy.
The investment bank also said it expected the U.S. Federal Reserve to start raising interest rates in December. The central bank left rates unchanged at record lows at a meeting earlier this month and voiced concerns about the health of the global economy.
The S&P 500 has shed about 8.5 percent this year compared with a fall of about 10 percent in the blue-chip Dow Jones industrial average and a 4 percent decline in the tech-heavy Nasdaq .
Goldman said it forecast the U.S. economy to grow 2.4 percent in 2016, down from a previous estimate of 2.8 percent. It also lowered its estimate for global growth outside the U.S., to 3.7 percent from 4.3 percent.
"Our baseline forecast is that the U.S. economy will grow at a modest pace, earnings will rise, and the S&P 500 index will climb slowly while the P/E multiple declines as interest rates rise," Goldman said. "'Flat is the new up' will be the 2016 investor refrain.