Nov 20 (Reuters) - Goldman Sachs expects modest returns for the S&P 500 in 2015, with the index ending the year at 2100, but still believes volatility will remain low, making it difficult for active managers.
In a 40-page research outlook released Thursday, strategist David Kostin said the S&P's P/E will stop expanding, as earnings rise 5 percent and as price increases are quite slow.
The median 12-month price-to-earnings ratio for an S&P stock is currently at 17, a level exceeded only 15 percent of the time over the past 40 years.
"We expect the P/E will contract and the index will slip during the second half of 2015 as the Fed takes its first step in the long-awaited tightening cycle," the firm wrote. (Reporting By David Gaffen; Editing by Chizu Nomiyama)