By Johann M Cherian and Medha Singh

June 27 (Reuters) - The S&P 500 and Nasdaq Composite hit

all-time highs on Friday as megacap stocks surged on renewed AI

enthusiasm and the prospect of a looser monetary policy,

powering a recovery in U.S. stocks from months-long rout.

The benchmark index rose 0.2% to 6,154.81 points,

surpassing the previous peak of 6,147.43 on February 19, while

the tech-heavy Nasdaq gained 0.3% to 20,229.31 points, exceeding

its record high of 20,204.58 on December 16.

Markets rallied this week as an upbeat forecast from

chipmaker Micron brought back investor confidence around

artificial intelligence, while AI bellwether Nvidia ( NVDA ) hit

a record high to reclaim its position as the world's most

valuable company.

Risk appetite also benefited from a U.S.-brokered ceasefire

to a 12-day air battle between Israel and Iran that sparked a

jump in crude prices and raised worries of higher inflation.

Dovish remarks from Federal Reserve policymakers have also

aided sentiment.

Trump's April 2 "reciprocal tariffs" on major trading

partners and their chaotic rollout had put the S&P 500 within a

striking distance of confirming a bear market when it ended down

19% from its February 19 record closing high.

The Nasdaq had tumbled 26.7% from its previous peak, marking

a bear market days after Trump's "Liberation Day" on April 2.

Since then, U.S. trade deals with the UK and China have

firmed up market expectations for more such agreements on the

hopes that a global recession could be avoided.

The S&P 500 has surged more than 23.5% and the Nasdaq about

32% since their recent lowest close on April 8, largely powered

by a handful of megacap stocks such as Microsoft ( MSFT ),

Nvidia ( NVDA ), Meta Platforms ( META ) and Amazon ( AMZN ).

If the Nasdaq closes above the December 16 record close at

20,173.89, it would be the end of the bear market and start of a

new bull market, according to common definitions.

A bear market is defined as a 20% decline from a record high

close, on a closing basis.

Both the Nasdaq and S&P 500 have gained 4.4% this year as of

Thursday's close. The blue-chip Dow has risen about 2%

this year and remains about 3.7% below its all-time peak.

(Reporting by Johann M Cherian and Medha Singh in Bengaluru;

Editing by Sriraj Kalluvila and Arun Koyyur)