JSFiddle - React, Tailwind, and code Playground

HTML

<input id="input_city" type="text" />

<div class="suggestions">
 <ul>
  <li value="0" name="New York">New York</li>
  <li value="1" name="London">London</li>
  <li value="2" name="Paris">Paris</li>
  <li value="3" name="Sydney">Sydney</li>
 </ul>
</div>

CSS

ul {
    padding: 50px 0;
}

li {
    padding: 6px 30px;
}
.selected {
    background: #ccc;
}

JavaScript

var $listItems = $('li');

$('input').keydown(function(e)
{
    var key = e.keyCode,
        $selected = $listItems.filter('.selected'),
        $current;

    if ( key != 40 && key != 38 ) return;

    $listItems.removeClass('selected');

    if ( key == 40 ) // Down key
    {
        if ( ! $selected.length || $selected.is(':last-child') ) {
            $current = $listItems.eq(0);
        }
        else {
            $current = $selected.next();
        }
    }
    else if ( key == 38 ) // Up key
    {
        if ( ! $selected.length || $selected.is(':first-child') ) {
            $current = $listItems.last();
        }
        else {
            $current = $selected.prev();
        }
    }

    $current.addClass('selected');
});