* Industrials, foods lag as Mexico hits back on U.S. tariffs
* Dollar Tree, Dollar General slump after results
* GM surges after SoftBank invests in self-driving unit
* Dow down 1 pct, S&P down 0.7 pct, Nasdaq down 0.3 pct (Updates to close)
By April Joyner
NEW YORK, May 31 (Reuters) - U.S. stocks fell on Thursday after the United States moved to impose tariffs on metal imports from Canada, Mexico and the European Union, prompting retaliatory measures from some of its trading partners.
For the month, however, the S&P 500, Dow Industrials and Nasdaq had their biggest percentage gains since January. The small-cap Russell 2000 index, whose constituents tend to be domestically focused, had its biggest monthly percentage gain since September.
On Thursday, U.S. Commerce Secretary Wilbur Ross said a 25 percent tariff on steel imports and a 10 percent levy on aluminum imports from its allies would go into effect on Friday.
Mexico responded by imposing measures on U.S. farm and industrial products, targeting pork legs, apples, grapes and cheeses, as well as steel.
Canada said it would impose retaliatory tariffs on $12.8 billion worth of U.S. exports and challenge the steel and aluminum tariffs under the North American Free Trade Agreement and the World Trade Organization.
The S&P 500 Packaged Foods and Meats index dipped 2.0 percent, with all its 11 components in the red. Tyson Foods Inc and Kraft Heinz Co were the biggest drags on the index.
Friction between the United States and its trading partners has roiled financial markets since March, when U.S. President Donald Trump decided to impose the metal tariffs. Trade issues overshadowed economic data showing accelerated growth in U.S. consumer spending.
“There’s added uncertainty,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Chicago. “The tariffs are not just between the U.S. and China. Now you have North America and the euro zone. The market is even more sensitive to that, when it had already been on edge.”
The Dow Jones Industrial Average fell 251.94 points, or 1.02 percent, to 24,415.84, the S&P 500 lost 18.74 points, or 0.69 percent, to 2,705.27 and the Nasdaq Composite dropped 20.34 points, or 0.27 percent, to 7,442.12.
For the month, the S&P rose 2.16 percent, the Dow added 1.05 percent, and the Nasdaq gained 5.32 percent.
The S&P Composite 1500 Steel index gave up earlier gains after Mexico’s retaliation, though several of its components, including Nucor Corp and United States Steel Corp, advanced. The steel index ended the day down 0.1 percent.
Shares of industrial giants Boeing Co and Caterpillar Inc slipped 1.7 percent and 2.3 percent, respectively.
Adding to the trade worries was a report that the United States aimed to target German carmakers, having launched a probe last week into car and truck imports.
Utilities, seen as a defensive sector, were the biggest gainers among the S&P 500’s major sector indexes, rising 0.1 percent.
General Motors Co shares led the S&P 500 in percentage gains, rising 12.9 percent after Japan’s SoftBank Group Corp said it would invest $2.25 billion in GM’s autonomous vehicle unit.
Dollar General Corp shares declined 9.4 percent and Dollar Tree Inc shares dropped 14.3 percent after both discount retailers missed Wall Street estimates for their quarterly same-store sales.
Declining issues outnumbered advancing ones on the NYSE by a 1.83-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favored decliners.
The S&P 500 posted 19 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 144 new highs and 49 new lows.
Volume on U.S. exchanges was 8.09 billion shares, compared to the 6.63 billion average for the full session over the last 20 trading days. (Additional reporting by Medha Singh in Bangalore; Editing by Rosalba O’Brien and Chizu Nomiyama)