If more than one member of President Donald Trump's team resigns, the Dow could fall 500 points or more, closely followed trader Art Cashin told CNBC on Friday.

"If you had more than one resignation ... I think it would have a very formidable effect — 500 or 1,000 points on the Dow possibly," UBS' director of floor operations at the New York Stock Exchange said.

"Not all in one day, but I think it would move there," he added in an interview on "Squawk on the Street."

U.S. stocks were set for their second straight weekly drop Friday on concerns Trump's recent controversies will make it less likely for Congress to work with him to pass business-friendly legislation.

Some Republican lawmakers distanced themselves from Trump after his remarks following the violent protests in Charlottesville, Virginia. On Thursday, rumors swirled that Gary Cohn, Trump's business-friendly top economic advisor, could resign because of the president's words.

Cashin said he didn't think Thursday's sell-off was only because of speculation about Cohn. He said Trump has plenty of other talented people on his team, including "generals, etc., etc." But Cashin said a Cohn departure would have a big influence on the markets.

"If Cohn were to leave and that would start a rush out, then the fear would be the president wouldn't be surrounded by some of those confident people," Cashin said. "There are concerns that if Cohn went, a Wilbur Ross might go, other people might step away."

At this point, the markets doubt that Trump or Congress can get anything done, Cashin added.

Investors will be closely watching Trump's retreat to Camp David this weekend with Vice President Mike Pence to discuss U.S. security and the administration's strategy in Afghanistan, Cashin said.

"And then after that, we'll watch what the rhetoric is like as we move up to the debt ceiling. That's going to be critical," he said. "There's an outside shot that they might have difficulty getting that done."

Congress will need to raise the nation's debt limit by mid-October to avoid defaulting on loan payments. There is a possibility that it will be unable to pay all its bills in October unless Congress approves an increase in its borrowing capacity.

Regarding stocks, Cashin said the energy sector is a "mess" and "that is a great concern."