The bull was loose on Wall Street yesterday, charging to a record as stocks advanced broadly in extremely heavy trading.

Only 11 trading days after stocks crossed the 1,400 mark on the Dow Jones industrial average, the market leaped 23.05 points to close at 1,462.27. Gainers led losers by a 3-to-1 margin, as more than 150 million shares changed hand.

Market watchers cited several factors as contributing to the frantic end-of-the day activity. They included:

*The continued downward drift of interest rates and a strong bond market.

*New hope for congressional action on the budget deficit.

*Encouraging reports from the Geneva summit.

*Covering by short-sellers trying to avoid being trampled as the market roared ahead.

*The effort by cash-rich fund managers to improve their performance as they wind up the year.

"The market is smelling economic recovery," said John A. Mendelson, head of market analysis for Dean Witter. Mendelson, who said he has been looking for a 1,500 to 1,600 Dow Jones average, noted that a number of economically sensitive stocks had shown improvement, including Caterpillar Tractor, Ingersoll-Rand and Cooper Industries. "People are starting to anticipate an economic recovery," he said.

Mendelson said he was impressed by the action of the market, which overcame sluggish bond trading and a sell-off in airline stocks to leap forward. "The market just took off," he said.

Market strategist Larry Wachtel of Prudential Bache said of the market fever: "The theme that is driving it forward is interest rates."

With certificates of deposit paying 7 percent and money market funds 6.5 percent, he said, investors are searching elsewhere. "There is a flow of money always looking for the best return. And the best return is in stocks," he said.

Wachtel noted that there were 221 million shares in the short-sale column and that many of the short sellers were busy covering. Meanwhile, psychology, too, played a role, he said. "All the outs who didn't want to believe, suddenly wanted to come in," he said.

Michael Metz, market strategist at Oppenheimer & Co., said the flurry of mergers and acquisitions was reducing the amount of shares of publicly traded companies by 3 to 4 percent a year, creating "rising demand on a shrinking base."

The soaring Dow Jones was accompanied by new records in the broader indexes. The New York Stock Exchange composite index rose 1.33 to 116.12, breaking its old record of 114.82. Standard & Poor's 500-stock index climbed 2.42 to a new high of 201.41.

In trading yesterday, International Business Machines gained 1 to 140, and General Electric 1 3/8 to 66 1/2; American Telephone & Telegraph 5/8 to 23 5/8; Westinghouse Electric 1 5/8 to 45 7/8, and McDonald's 3/4 to 75.

Eastman Kodak rose 1 5/8 to 48 7/8 in active trading. On Wednesday, the company projected "solid" gains in sales and earnings for 1986.